Preventive maintenance will help lower condo insurance
Re: Blindsided: B.C. condo residents fearful as extent of insurance crisis remains unclear
I read this article with interest and a certain amount of dismay. We neither own nor live in a condominium. We do own a small apartment block. I believe the reasons for the dramatic increase in the insurance rates (and deductibles) for condominiums (and all multi-unit buildings) is in large measure due to common area infrastructure failures and particularly water damage.
The apartment block we own is all rental units — over the last 15 years we have engaged in upgrades and preventive maintenance, including a new boiler for heat and hot water and replaced piping in the plumbing system.
All that preventive maintenance results in fewer insurance claims, lower deductibles and therefore lower insurance rates. Unfortunately, with house and condo prices soaring many “owners” are totally stretched to pay the capital acquisition and operating costs, including outrageously high property taxes. Strata councils often do not have the background financially or in property management to understand the necessity for a “rainy day” fund and preventive maintenance.
Over time, this results in infrastructure failures that result in excessive (from a historical perspective) insurance claims and then dramatic increases in insurance rates.
If the government wants to be constructive, they may want to look at some mandatory requirements in strata council mandate documents requiring rainy day funds (at least equal to the insurance deductible), preventive maintenance (including pre-funding requirements and inspections).
Unfortunately, reduced equity requirements to make condos “affordable” do not do that. They are a debt trap with only the repayment of capital and interest being disclosed.
They do not disclose a condo fee that covers operating costs plus an accrual for capital maintenance.
Bad on developers, bad on government for not requiring full disclosure, bad on strata councils for not being realistic, etc.
That’s the perspective of a responsible landlord who does not want to pay for other people’s inadequate maintenance practices through excessive insurance rates.
— Bob Matthews, North Vancouver