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B.C. condo owners face bankruptcies as insurance costs soar

“You could lose your home.”
Photo by Glen Korstom/BIV

Uninsured condo owners could find themselves bankrupt and homeless if they don’t maintain their suites and personal insurance as strata insurance costs skyrocket, said the Condominium Home Owners' Association of B.C.

The cost of catastrophes, construction, claims and reinsurance has pushed insurance premiums on many British Columbia strata corporations, or condo owner groups, through the roof.

The concern for individual owners is not having their own suite insurance to handle unforeseen crises, said association executive director Tony Gioventu.

If something from a suite causes damage to common property, the suite owner would be responsible for the deductible of the corporation, he said.

Korecki Real Estate Services Inc. manages 7,500 strata units in dozens of Lower Mainland buildings. Of the strata corporations that have recently renewed their insurance, around 90% saw premium increases of 50-100%, Korecki property manager Mike Alavi said. “We saw half of the stratas get hit on December 31, and the other half are going to get hit on April 30,” Alavi said.

Those jumps are above the Insurance Bureau of Canada’s provincial average of 35%, but below some of the jaw-dropping 300-600% increases Gioventu has heard of.

And, with building insurance rates soaring, so are deductibles, payments an individual could find themselves responsible for.

“Those deductibles are no longer $25,000,” Gioventu said. Instead, an owner could face a bill ranging from $100,000 to $750,000.

A problem, Gioventu said, is many people no longer face the condition of insurance for a mortgage once the latter is paid off. And some don’t reinsure, leaving themselves vulnerable.

Moreover, some don’t maintain their suites, leaving themselves open to huge bills if something goes wrong.

“I am amazed at the number of people who don’t purchase homeowner insurance when they live in condos,” Gioventu said.

He cited an issue of people hanging clothes from fire sprinkler heads.

“These types of claims can easily reach $1 million,” he said.

“You could lose your home.”

Gioventu also stressed the need for strata corporations – especially those in aging structures - to be proactive in maintaining their buildings. Neglect is a recipe for incurring a claim that will make reinsurance harder and more costly, he said.

He said some stratas have received insurance notices with massive increases the day before they are due.

“We have stratas that are in a real crisis,” he said.

Gioventu stressed the importance of depreciation reports that can point a strata corporation toward future problems that should be planned for. But, he said, the provincial government has allowed corporations to opt out of such reports, leaving inspections neglected and planning not done.

“The object is to make sure properties are being maintained or repaired,” he said. “They are restricted by what the owners won’t pay for funding.”

Part of that, he explained, is that strata councils need to remember “ they are a board of directors of a company and [they should] behave like that.”

And, that would make getting insurance harder as claims rise.

“The strata is going to end up paying the cost,” he said. “It could potentially end up bankrupting a community.”

Gioventu said the government has a role in mitigating the problems condo owners face.

One plan might be for government to amend legislation to allow stratas to negotiate insurance fee charges.

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