REAL ESTATE

Why surging Vancouver condo insurance rates haven't found their ceiling yet

Spiralling costs for condo insurance add one more strain to Vancouver’s housing affordability challenge

You can't say we weren't warned. Last April, HUB International, Canada's largest real estate insurance broker, released a bulletin advising Vancouver area strata councils to expect insurance premium increases of 25 percent—more in condo buildings with an expensive claim history. HUB blamed Vancouver's escalating construction costs and the global insurance industry's rising losses from catastrophic weather events.

As president of my own strata council, I moved immediately to limit our liability, inviting HUB'S risk analyst to inspect our 20-year-old, Oakridge-area condo building. On his recommendation, our council commissioned a $45,000 re-piping project to limit the likelihood of expensive future leaks, and we added $15,000 to our 2020 insurance budget.

Then, at the end of December—two days before our old policy lapsed—hub offered a new quote, up 50 percent, from $59,655 to $91,655. And the deductibles: also up. To fix future water damage, we'll have to pay the first $50,000, up from $10,000. Flood deductibles went from $10,000 to $25,000. So we're paying more money and getting less coverage.

When I complained—and I did complain—everyone told me how lucky I am to live in a well-managed building with no recent insurance claims. As reported elsewhere recently, a 181-unit Langley strata, also with a good claims history, watched its premium jump from $97,000 to $371,000 and its water deductible rise from $5,000 to $250,000. In Abbotsford, a large strata

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that had been paying an annual premium of $66,000 got a new quote for $588,000, although the broker later reduced the amount to $241,000, but with much less coverage.

Those, of course, are among the worst cases. But our Oakridge strata example seems typical—and terrifying. A $32,000 insurance increase will push my annual strata fees up $519. I also had to pay 25 percent more for my individual liability and content policy ($167), plus a $120 premium to cover the larger strata insurance deductibles, for a combined hike of $806.

My insurance—on an “average” Vancouver two-bedroom condo worth less than $1 million—now costs more than my property taxes. And HUB is warning of 2020 increases of 45 percent or more. Note, too: those costs are cumulative. You'd have to be charmingly optimistic to imagine future premiums declining.

Tony Gioventu, president of the Condomium Home Owners Association of BC, shakes his head at the impact on condo affordability, blaming the insurance industry for being slow to account for increased construction costs and for taking unfair advantage. “They're getting greedy,” he says.

But HUB'S B.C. real estate associate vice-president, Brent Pavan, says brokers are doing their best in a market where the big insurance companies and the international reinsurers are reducing their exposure in this space, or getting out of the category altogether.

With other reports of deductibles up to $500,000, and only one-third of all condo owners even buying individual unit insurance, this looks like a disaster in waiting that calls for government attention. Wouldn't it be nice if ICBC weren't—what was that quote?— “a dumpster fire.” •