If you own rental properties, or are a member of a Strata Council or Condo board, you may have noticed a major spike in your insurance premium over the past 6 months. If you haven’t run into this problem yet, then brace yourself, because it’s likely coming! Forecast for 20%, depending of course on location, building type, claims history, etc.
Why are property insurance premiums experiencing such major increases?
It’s important to remember that insurance companies are very profitable by design. Essentially they have been paying out too much over the past couple of years for major disasters, and simply need to increase their margin spread to compensate.
Combine this with one major insurance company exiting the market, which has lead to less competition and a resulting increase in rates for the end consumer!
Water damage deductibles in property insurance policies on the rise
Another thing you will likely notice on your insurance coverage is that the water damage deductibles have been increasing from $5,000 to $10,000 and beyond. This is due to continual water damage claims, particularly in older wood frame buildings. Now that most people have hard surface flooring in their strata and rental units, the cost of replacement is much higher than it was in the past when carpets ruled the land!
On a personal level, our entire rental portfolio just went through this. At a time when rents have been level and dropping even slightly, we have faced a 30% increase in our properties across the board. One property in Chilliwack, BC, saw an increase of a whopping 47%. That certainly hurts the cash flow…
What can a rental property or strata owner do about this massive insurance cost spike?
Unfortunately, your options are somewhat limited here. Our recommendation is to get out and shop around. If you’re a member of a strata council, have your strata manager obtain quotes from 3 different companies. If you are managing rental properties, start calling around!
Looking for any help managing your properties? Reach out to our Vancouver Property Management Company today!