Condo/Strata Corporations

Information for condominium or strata corporation board members.

Ask The Expert

Are you a board member of a condo or strata corporation? Do you have a question about insurance? Email your question to riskmanager@ibc.ca.

The Situation

Tough market conditions have led insurers to re-evaluate their risk appetite for writing new business and having more discipline in commercial underwriting. As a result, a small number of condominium and strata corporations, specifically in British Columbia and Alberta, are experiencing issues around the availability and affordability of insurance.

Some of the factors that are contributing to the current market include:

  1. Significant Catastrophic Loss Events
    Canadians and insurers have seen significant catastrophic loss events across Canada, from wildfires to flooding, and the frequency and severity of weather-related losses continues to increase. While Canada’s insurers used to pay out $200 million annually in claims due to severe weather, the amount now exceeds $1 billion every year.

  2. Current Hard Market
    In most cases, insurance is available to condo or strata corporations. However, insurance is about risk, and current economic conditions together with heightened risk factors – such as increased severe weather, increased water damage claims, and higher unit vacancy rates – result in increased risk, which means insurers may be more selective in what they insure.

  3. Rising Cost of Labour and Materials
    We are also seeing costs rise for labour, due to a shortage of skilled tradespeople, and a rise in the cost of building materials, which contribute to the cost of claims and consequently property insurance premiums.

What Other Factors Generally Impact the Price of Condo or Strata Insurance?

Insurance is about risk. Some properties may be viewed as higher risk due to a variety of factors, which can affect the availability and affordability of insurance coverage. This can include:

  • The type of construction and the materials used in a building’s construction, including whether material is fire resistive (e.g. wood frame structures are considered higher risk).
  • The geographical location of a condo or strata (e.g. buildings located on flood plains pose a greater risk of water damage due to overland flooding and for buildings located further north the risk of water damage from frozen and burst pipes is more prevalent).
  • A condo or strata corporation’s claims history (e.g. repeated water damage claims or multiple other claims). Inadequate maintenance can increase the number of insurance claims made by condo/strata corporations, which accounts for increases in premiums.
  • Whether it is a multi-unit, multi-storey condo or strata, multi-unit buildings are more prone to water damage through accidental overflowing of toilets and bathtubs, as well as burst pipes and supply line failures.
  • Whether units are occupied by tenants or owners. A unit occupied by tenants may not be maintained as adequately and repairs may not happen as quickly as an owner occupied unit.

Finding a Solution: Condominium/Strata Action Plan

Getting condo and strata corporations back on the path to affordable insurance is a priority for the industry. To do this, Insurance Bureau of Canada and its members have worked closely with government and other stakeholders on a Condominium/Strata Action Plan.

The Condominium/Strata Action Plan is a multi-faceted approach that ensures all stakeholders have the best up-to-date information available, promotes the critical importance of risk mitigation and loss prevention in condos and stratas and provides assistance, through their broker, to condo and strata corporations facing issues in the marketplace in Alberta and across the country.

The Condominium/Strata Action Plan includes:

IBC Risk Manager

  • A dedicated Risk Manager who will work with a broker of record of a condo/strata and their respective condo/strata boards to increase awareness about how insurers view risks and evaluate properties. The Risk Manager will provide information on how claims history, building materials and location can affect insurance rates.
National Commercial Insurance Task Force
  • A National Task Force on Commercial Insurance has been convened across the country to bring together insurers, government and stakeholders to find common sense solutions to assist businesses, such as condo or strata corporations, in obtaining affordable insurance. The Task Force will develop a report with recommendations aimed at improving insurance availability and affordability in the commercial insurance market. The report providing recommendations will be published in fall 2020. 
  • The Task Force includes representatives from the Canadian Condominium Institute, Canadian Trucking Alliance, Canadian Federation of Independent Business, Insurance Brokers Association of Canada, Risk and Insurance Management Society, IBC, the insurance industry and other stakeholders.
  • The Task Force held its inaugural meeting in Edmonton on February 19, 2020. Additional meetings will be held in Vancouver, Halifax, Toronto and Montreal in the coming months.

What You Can Do Now

Other actions condo or strata corporations can take now include:

  • Talking to your insurance representative about what risk management strategies will help protect your condo or strata building. An efficient and effective maintenance program will help to mitigate many of the risks your condo or strata corporation faces.
  • Shopping around for the most affordable coverage.
  • Calling IBC’s Consumer Information Centre at 1-844-2ask-IBC (1-844-227-5422) for more information or emailing your insurance questions to riskmanager@ibc.ca