Condo Association director knows of 11 B.C. stratas currently unable to secure building insurance. In a normal year, he said, there wouldn't be any stratas in that situation.
More B.C. stratas are reporting unpleasant surprises when they try to renew their condo insurance, with some facing shocking hikes in their premiums while others are unable to secure building insurance at all.
At least one federally regulated insurance provider has ceased selling new policies in B.C., citing “rapidly emerging challenges,” in a statement to Postmedia.
An increasing number of stratas have been shocked to learn they’re unable to renew their insurance, a development that experts say could throw the local condo market into a state of uncertainty unlike anything they can recall.
Brokers are reporting condo insurance renewal premiums increasing between 50 and 400 per cent over last year and deductibles increasing from $25,000 per claim to $500,000 or more.
But the precise cause of the situation remains unclear. When the issue was raised Thursday in the B.C. Legislature, Finance Minister Carole James cited increasing real estate prices and climate change.
New Westminster condo owner Trevor Morgan learned this week that his building’s insurance would run out at the end of the month, after Hub International Insurance Brokers sent the strata formal notification that they were “not currently able to secure insurance for the building and coverage will cease Feb. 29, 2020.”
When Morgan read the news, he said: “My heart was beating in my chest, I felt like I’m ready to throw up.”
The strata had voted overwhelmingly in favour of selling the building to a developer and a tentative sale is in place, Morgan said. Now he worries this news will jeopardize the deal. Many of the building’s residents are seniors on fixed incomes, and “they’re freaking out,” he said, at the possibility of the insurance problem scuttling the planned sale.
If building insurance rates end up doubling or tripling — as they have done in many Metro Vancouver condos in recent weeks — many of these seniors won’t be able to afford to keep their homes, Morgan said, “and they are going to have to walk away from their properties.”
Tony Gioventu, executive director of the Condominium Home Owners Association of B.C., said Morgan’s strata should be making a series of calls: to his association office, to a new insurance broker, and to a lawyer. Hopefully, Gioventu said, the insurance problems won’t scuttle the sale of the building, but strata members “should be deeply concerned.”
Morgan’s strata — or any other in a similar situation — should try not to panic, Gioventu said. “But they should stay on high alert and be concerned about how they are going to get insurance.”
Gioventu said Thursday he knows of roughly 11 stratas in B.C. currently unable to secure building insurance.
In a normal year there wouldn’t be any buildings in that situation, Gioventu said. “This is certainly unusual.”
There are generally two kinds of insurance in condos: building insurance, which stratas are required to have under the Strata Property Act, and condo unit owner insurance, which owners can choose not to carry to carry their own contents. Building insurance premiums have been skyrocketing in the first weeks of 2020, and Gioventu expects condo homeowner rates might increase too.
Chuck Byrne, executive director of the Insurance Brokers Association of B.C., said his group is hearing, anecdotally, about more “non-renewals,” where stratas can’t secure building insurance. He’s not sure exactly how many “non-renewals” there are around B.C., he said, but he expects more to come.
“We didn’t hear about them, usually, previous to now,” Byrne said. “I’ve never seen anything this bad for a long time.”
Sonnet Insurance, a federally regulated insurer, confirmed Thursday they were “temporarily pausing the sale of new policies in B.C.,” with senior vice-president Roger Dunbar writing in an email: “The B.C. property insurance market has encountered rapidly emerging challenges that require us to make adjustments to our property offering in the province.”
Existing Sonnet property customers “will not be impacted by this decision,” Dunbar said.
The issue was raised Thursday in the B.C. Legislature, where Liberal housing critic Todd Stone said: “British Columbia’s strata market is in crisis.”
Jane Thornthwaite, Liberal MLA for North Vancouver-Seymour, rose in the legislature, quoted a Vancouver Sun story from this week, and said: “This is a crisis that demands immediate action.”
Responding to Thornthwaite, B.C. Finance Carole James said her government was “very concerned” about impacts not only for condo owners, but also for tenants renting strata units, who could see cost increases passed along.
The issue is also affecting other parts of the country, James said, adding: “that’s why we’ve had a call with our federal colleagues and provincial colleagues.”
However, at the time of buying a strata unit, Matt Gul real estate agent advises you to use this clause; in order to ensure that you (the buyer) has the opportunity to receive and review copies of the strata corporation’s insurance policy. The clause will also ensure your ability to receive satisfactory insurance which will include any owner’s portion of deductibles payable prior to entering into an unconditional offer.
The Clause:
Strata Insurance Clause Subject to: (A) the Buyer reviewing and approving the terms and rates of the strata corporation’s insurance, including the premium amounts, deductible amounts, and coverage limits thereunder and the date of expiration of such policy or policies; and (B) the Buyer confirming the Buyer’s ability to obtain personal strata owner insurance on terms satisfactory to the Buyer, including coverage for any owner’s portions of deductibles payable under the strata corporation’s insurance, in each case on or before ________________. These conditions are for the sole benefit of the Buyer.
Immediately upon execution and delivery of this Contract of Purchase and Sale by all parties, the Seller or the Seller’s agent, will obtain copies of the strata corporation insurance policy or policies, or a summary of coverages, a cover note or a binder in respect of same, and will immediately, upon receipt, deliver such document(s) or cause such document(s) to be delivered to the Buyer or the Buyer’s agent.
Notes/Use
Who should be using this clause?
People who should be using this clause would be REALTORS® who represent buyers in the purchase of strata titled properties. Or when a buyer wishes to write an offer on a strata titled property.
When is the clause used?
The clause is used when a buyer is interested in writing an offer on a strata title property where the buyer has not had the opportunity to receive and review a copy of the strata corporations insurance policy in advance of writing an offer and or when the buyer has not already ensured that satisfactory insurance is available including for any owner’s portions of deductibles payable under the strata corporation’s insurance personal property.
Business Practise Consideration Tips
When you are representing a seller, it would be best with the sellers to obtain the strata corporation policy or policies at time of listing the property, so that they are available to buyers.
If you would like to learn more about the strata market's insurance changes, the strata clause that Matt Gul has provided, or if you are thinking about buying or selling your properties, please contact Matt Gul, who is a top luxury real estate agent situated in West Vancouver, who can help you with all of your needs. To contact Matt Gul please call him at 778.888.8888 or email him at matt@mattgul.com
Source: https://vancouversun.com/news/local-news/strata-market-in-crisis-some-b-c-condo-buildings-unable-to-buy-insurance
Summarized by: Onur Gul on instagram at @onurgulfilm