As a condo or townhouse owner in B.C, your home insurance is broken down into two distinct categories:
- The insurance you pay with your strata fees covers the complex structure and common areas.
- Your own personal insurance for your unit and the contents within your home.
For many, this means leaving the strata insurance portion up to the strata members to find & secure the best option. As a homeowner, it is up to you to ensure the best insurance coverage for your home. Learn a few tips on calculating the value of your contents for insurance purposes.
The condo insurance market in B.C. has been feeling some pressure lately. As happy as some condo or townhouse owners may be to have had secured (possibly very affordable) insurance for their home or building, it’s still essential that owners take a proactive approach to ensure that they have full coverage for their property’s up-to-date value. This goes for all homeowners.
ALSO: What To Know About BC’s Condo Insurance Market Trouble
Local Underinsured B.C Condo Owners Face Hefty Levy After Fire
After a fire caused significant damage to a local B.C. condo building, owners were dealt stiff bills between $36,000 to $57,000 each in levies. This was due to the complex being underinsured with its current condo insurance policy by $3 million. It gets very messy regarding who is to blame, and the road forward seems unclear. This is an example of why homeowners must be proactive regarding their insurance coverage.
Underinsured Homeowners Definition
An insurance agreement is based on a specific asset and the value of that asset (among many other things, like risk). If the asset’s value changes, the insurance agreement must be adjusted accordingly. For example, if a property increases in value over time, the insurance to cover that property should be relatively more expensive. If the property’s value is not thoroughly re-evaluated properly about the insurance coverage, it may be underinsured.
Underinsurance Gap
The property’s underinsurance gap is the difference between an asset’s current value and the amount covered in an insurance contract (if there is a difference). Every property’s value will differ, so their underinsurance gap and risk will also be other. A condo building may be worth millions, so millions may also underinsure it. A million-dollar home in B.C., however, may be at risk of being underinsured by tens or hundreds of thousands of dollars. Either way, it’s not a good situation to be in as an owner.
How Does Underinsurance Happen?
If a property’s value and insurance coverage are not thoroughly re-evaluated yearly, it risks being underinsured. Year after year, many insurance policies get renewed without a complete re-evaluation of the asset being covered, its actual, current value, and what it would take to repair or replace the property today in the case of significant damages. Coverage providers can and do estimate changes in the property’s value (and risks), but these are just estimates. This means that many properties in B.C. are currently at risk of being underinsured.
Avoiding Underinsurance For Your Property
The best advice to avoid underinsurance for your property is to stay in close contact with your coverage providers and to ensure that complete re-evaluations of your property and insurance policy are done annually along with the renewals. This could mean having to pay for a 3rd party appraisal on the property. It may seem like a hassle, but it is worth the time and effort.
Underinsurance Coverage Protection
Another option to minimize the risks of underinsurance is to get separate coverage protection for it. Although this may mean paying a bit more in premiums every month- it is well worth the money, effort & stress saved from having to pay for appraisals and ensure good full coverage year after year.
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We’d be happy to help answer any questions you may have, so please feel free to contact us today if you have any questions about underinsurance or ensuring your property’s coverage is up to date. We can also offer you free quick insurance coverage quotes online too! Contact our team at 1.844.544.4663 and see what makes us Harbord – The Home Insurance People™!
