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2022 – 2023 Insurance Quotes
Hello,
44 Unit Row Townhouse, 2022 $11.85M, 2023 $13.21M.
That’s a 12% change to our Property Valuation from 2022 to 2023.I don’t believe I planted that many trees or shrubs, nor was the grass that well maintained…
Honestly… We didn’t add any actual tangible value!Insurance Quotes for 2023 were, +140%, +114% (the company we have history with), and +104%, from the 2022 rate.
That’s a ridiculous spread and the “proof within the pudding” was that all the policies were practically identical!
We haven’t submitted a claim in at least 5 years. (prior to my ownership maybe a few?)I have an average sale price of $240k when I tally all the closing prices of every unit within the last 3 years.
However, insurance valuations divided by units are over $300k a unit…CPI is not the metric to raising rates!
Clearly there are some discrepancies between paper and real asset value.
When the pendulum swings and we have a firm recession for years… Will rates go down?All I’ve really heard is that Insurance Caps were lifted a couple of years ago and we’ve got no choice according to the Act.
The ol’ between a rock and hard place, where we’re all in this together… Separately.
Neil
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7 Replies
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I’m so sorry for your frustration on this! Insurance is usually one of the top three costs for townhouse condo corporations. It definitely can be a frustrating bill to pay.
Hopefully the below information helps a little!
Insurance in Alberta will cover the condo corporation for the rebuild cost – not the market value. It is pretty common for the rebuild value to be higher than the market value. The amount of insurance you are purchasing is generally based on the insurance appraisal.
In general, we are seeing the insurance rates for condo corporations go DOWN, while the rebuild cost goes UP resulting in the insurance premium renewing at approximately the same price as last year. Townhouses aren’t seeing as much of a rate decrease as apartment-style and high-rise properties, so that makes sense that you are seeing an increase from last year.
One reason that we have seen rebuild rates go up is because of changes in the supply chain – things simply cost more today than they did a couple of years ago. Additionally, we are still seeing an impact on the labour market from covid and other factors that also increases rebuild costs.
It is true that there is no condo insurance cap for condo corporations… but I believe that is true for all property insurance in Alberta except for vehicles. Perhaps the person who told you this was referring to the 2020 change where subscription insurance policies can have unique premiums set by each insurer for the policy – this has resulted in insurance rates for larger condo corporations going down. However, this change was a major positive for condo corporations. Here is the bulletin for more info: https://open.alberta.ca/dataset/80b795f6-c781-4268-9da2-f21e1d3cc338/resource/e182c131-c76b-4e96-b944-e20fa59aafb9/download/tbf-superintendent-of-insurance-2020-03-bulletin.pdf
One thing to keep in mind for condo corporation insurance is that the amount of insurance you purchase is generally capped to the amount you see on your insurance policy. If the actual rebuild costs more than what the appraisal estimated it would then the condo corporation could be in a position where the entire loss is not covered by insurance. There is nuance to this that is best discussed with an insurance broker, but in general I really recommend insuring your property to the full amount listed in the appraisal even if you think the estimate is too high.
Additionally, trees and shrub insurance is normally, by default, a fixed percentage of the total property value or a fixed dollar amount – you would have to check with your insurance company. I just share this as you mentioned trees and shrubs and these items are insured differently than the building structure. If you didn’t already know this and the trees and shrubs are important to your complex I would really recommend a conversation with the insurance broker about your trees and shrubs every year to make sure they are insured the way you expect.
I know you didn’t ask for a lot of this information, but I used to be an insurance broker and I felt like you might benefit by having this info!
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Thank you very much Dana!
You wrapped around all my issues, and I have a better understanding now.
There is nuance to this that is best discussed with an insurance broker, but in general I really recommend insuring your property to the full amount listed in the appraisal even if you think the estimate is too high.
Does this mean that a condo could not insure for the full amount?
I didn’t even know that was an option nor do I believe it should be…
I just imagine Owners suffering from Boards “saving a few bucks” in a full loss situation.
A risk not worth taking.I appreciate the detailed response.
Thanks!
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I’m so glad you found this info helpful!
As I understand it, there is no requirement in Alberta legislation that a condo corporation gets an insurance appraisal. Many condo corporation bylaws will require an insurance appraisal though, and I would say the majority of condo corporations do get an insurance appraisal regardless if this requirement is in their bylaws.
Alberta legislation says that the condo corporation must place insurance on the common property against loss resulting from destruction. Arguably if the condo corporation does get an insurance appraisal and despite the insurance appraisal the board purposefully under-insures the common property, and then the condo corporation suffers an insured loss, the board members might be vulnerable to a successful lawsuit by the owners.
You are right it would be ideal if the requirement for an insurance appraisal was required in legislation.
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Absolutely unsustainable. The government needs to be convinced that Condo Insurance is being unfairly targeted for increases, partly because they are thought of as ‘bad risks’ in general. Unfortunately the Government is not open to convincing of anything right now. They have their own agenda and protection for Condominiums doesn’t appear to be on it.
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One other avenue COF could look into is supporting a reciprocal insurance exchange. Although this might be better done through CCI as you will need heavy participation and support from the condo manager brokers. I heard that Marsh was trying to set something like this up a couple of years ago. Marsh is the insurance broker of last resort for condo corporations (so I’m told as I’ve never had to use them).
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Hi all
Agree that condominiums should be getting appraisals at least every second year to ensure they are insured properly.
Insurance is about risk and condominiums are deemed high risk, as traditionally we haven’t managed the buildings & equipment, finances, or community well. The Insurance Bureau of Canada recommends working with a Risk Manager.
http://www.ibc.ca/ab/insurance-101/condo-action-plan
The condo I live in went from ~30K$/year for insurance to ~215K$ for insurance over 6 years, so yes costs are skyrocketing.
Michelle
