What Is Happening with Rising Condo Insurance Rates?
The sharp increase in condo insurance has been making headlines over the last little while.
It is estimated that condo insurance rates have risen 15 – 20% nationally (source: Canadian Underwriter).
The cost of claims is cutting into profitability for insurance providers, and many are getting out of the condo insurance market completely.
If you’re a condo owner here in Ontario, or even a renter or tenant, this alarming increase in rates is no doubt on your radar.
Let’s take a look at what is happening with these rising insurance costs for condominiums…
Why are condo insurance rates rising?
There are various factors at play for why condominium insurance is rising so quickly and sharply…
~ One is the sheer volume of condos being built. A huge number of people live in condos now, and the more condos that are built, the more claims there would potentially be.
~ Not only are we seeing more condominiums being built, we’re seeing them go up as quickly as possible to meet the demand for condos. This quick and dirty building means that quality is being sacrificed for speed of construction.
~ More buildings also means more property managers, many of whom may not have experience with the proper handling of an insurance claim. In fact, the Condominium Management Regulatory Authority of Ontario decided to licence property managers, ensuring they receive training and education in the proper handling of claims, to mitigate the problem (and associated costs) of poor management of the claims process (source: Canadian Underwriter).
~ Condos are particularly susceptible to water damage. One simple burst pipe can lead to damage over several floors or numerous condo units. So losses can be much larger in apartment buildings than they would be in a detached home.
~ Another factor identified is the fact that often times the wrong contractor is called in to handle the job of fixing the problem. An inexperienced contractor may not understand what needs to be done to properly address and fix the issue that initiated the claim in the first place. Or they may lack experience specifically with condos. This can lead to further claims and further costs for the insurance provider.
~ There is also the increased cost of labour and materials to fix problems.
~ Climate change is another factor. With more and more extreme weather conditions, there is an increased chance of damage to buildings.
As claims costs are going up, insurance rates are also rising, but many insurers are finding that rate increases are not keeping up with actual costs of claims. So what does the future hold for condo insurance in Ontario? Well, so far Ontario has been comparatively more fortunate than other provinces (most notably BC and Alberta) – we have not seen our rates rise so sharply. However given the trend of what is happening elsewhere in our country, it’s reasonable to surmise that Ontario could soon be in a similar boat when it comes to condo insurance rates surging, especially given the large amount of new condos being built in Toronto. It’s something to keep careful watch on.
You might also find this post from the blog archives helpful: How is Condo Insurance Different from Home Insurance?
Further resources from Canadian Underwriter:
- Condo Coverage Crisis
- Sedgwick exec’s Top 4 reasons why condo claim severity is through the roof
- What brokers are looking at to help condo corporations reduce deductibles
- Industry execs to discuss how to navigate the condo insurance market
Want more information about condo insurance rates in Ontario? Reach out to our team and one of our insurance professionals would be happy to discuss with you. Looking for a quote for insurance on your condo? Click here.
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