Condo insurance premiums are maintaining their elevated pace, which began around a year ago, as a consequence of extreme weather events, says LowestRates.ca.
“Condo insurance prices have continued a trend that’s been happening for well over a year, and they continue to increase, specifically in B.C. and Alberta. The reasons behind it are largely twofold: the first is the increase in costs in raw materials, such as lumber, so when things need to be fixed, it costs more to fix them than before due to supply chain issues brought on by COVID,” said Justin Thouin, co-founder of LowestRates.ca.
“The second reason is extreme weather events, like wildfires and hail storms, are causing massive damage to condominiums that require significant outlays from insurance companies to repair them.”
The cost of home insurance premiums has declined through the pandemic because people have been spending more time in their homes and it has afforded them the opportunity to catch problems early. However, the same cannot be said of condo insurance premiums because the buildings’ exterior facades are being damaged, requiring condo corporations, which typically don’t have enough in their reserve funds, to pass the expenses onto individual unit owners, who in turn file deductibles.
But costs are rising for another reason too, says Thouin.
“It doesn’t help that the investment vehicles that insurance companies typically use to generate further revenue and profit for themselves have lower yields than they once had, forcing insurance companies to generate more profit through their premiums than they did before,” he said. “Investment returns are a factor but not as big a factor as damage to condos. Insurance companies are paying out a lot in claims to fix things in condos and they’re having to do it more often because of natural disasters and so on.”
The increases are more acute in British Columbia and Alberta where they increased by 34% and 22%, respectively, in Q2-2021 compared to the same quarter last year. On a quarterly basis, condo insurance premiums surged by 22% in B.C. and by 10% in Alberta.
In Ontario, the premiums rose at a more modest pace of 8% year-over-year in Q2, and by 2% from Q1-2021.