Ada Slivinski: A sudden and dramatic spike in strata insurance has some looking for any port in a storm.
An Abbotsford condo has seen a 780 per cent increase in insurance from its rates last year.
According to Insurance Business Canada, “BFL, which insures the aforementioned Mahogany Tower, raised the property’s rates from $66,000 in 2019 to a mind-boggling $588,000 in 2020.”
This translates into a one-time tax of $3,000 per unit and an increase of $600 in monthly costs according to Mike Pauls, president of the building’s strata council.
For many of those already stretched to their maximum, that can only drastically impact their lifestyle, and potentially even force some to move.
This is not an isolated case. Across the province, condo insurance rates are rising astronomically. Homeowners are looking at “anywhere from 50 to 300 per cent, and deductibles are going from the conventional $10,000 or $25,000 to $100,000, $250,000 or $500,000,” said Tony Gioventu, executive director of the Condominium Home Owners Association.
Part of the reason is increasing property values, but those alone have not spiked so quickly to warrant an increase of this magnitude. Earthquake risk is something insurers also say they factor in, along with other risks around climate change.
The insurer for the Abbotsford condo explained that the increase was due to fewer insurance entrepreneurs willing to share the risk of insuring the high-rise, which is valued at $79 million.
“To insure full risk for one building, one building may have a $100 or $200 million dollar value to it, that’s an enormous risk for a single insurer,” he said.
One suggested way to remedy this is to run home insurance through a provincial entity, just like with car insurance in B.C. Metro Vancouver Chair Sav Dhaliwal has been vocal in calling for the province to step in, “Why not have a crown corporation, such as ICBC, to take on this also as another division of insurance?” he told News1130.
The argument is that a crown corporation would not be focused on profit and thus able to provide more affordable rates and measured increases.
But the market has not yet had a chance to play itself out. With all the attention this particular building has received, it’s likely that alternate home insurance providers are already pitching them a lower rate.
In a free market, there’s always someone willing to take a bigger gamble to win business. Meanwhile, Premier Horgan has said his government will “do what it can” to address rising costs.
At least now, when private insurance rates go up, we as homeowners have a choice. If the province takes over, we could be faced with special taxes and skyrocketing premium hikes – and nowhere else to turn for that vital service.
Ada Slivinski is the Founder & Principal of Jam PR, a boutique agency focused on helping small businesses get big exposure. You can reach her at firstname.lastname@example.org
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