CCI Newsletter 4 - 2021-2022

Q&A: Insurance Basics

down to what is the responsibility of the condo vs the unit owner. If more is being put on the unit owners, then the condo replacement cost may go down which will drive premiums down. TB - In the long run, yes. The fewer finishes included in the standard unit means the portion the Corporation is responsible for will be smaller in the event of an insurable loss. The smaller the loss, the less likelihood it will be higher than the deductible and will trigger a claim. And with a higher deductible, the threshold for triggering a claim is higher which requires the Corporation to self insure for the smaller losses. Fewer claims triggered results in less surcharges related to losses and keeps the premium as low as possible. It is important to remember that higher deductibles put the onus on the unit owners to have adequate coverage for that deductible through their own unit owner policy in the event it is charged back to their unit. 3. Does one type of claim affect your premiums more than other types? Which? CD - With most programs, it does not make a difference. MS - Any claim with a payout will affect the policy across the board. Different claim types for example, water losses may result in coverages being taken away or amended. TB - Insurance companies are most concerned with severity and frequency . The more severe or large the claim, the higher the cost to the insurance company which will result in a surcharge being added to the premium at renewal. If a corporation has frequent losses of the same type, such as water or fire, the premium is likely to increase as well as the deductibles related to that type of coverage. 4. What are the main reasons being given by insurers why they aren’t renewing? CD - Frequency of losses, older buildings not updated, buildings being located in flood zones (not a problem in the past) MS - Frequency of claims. TB - A major concern for insurance companies and their reinsurers is age of buildings. Older buildings are more likely to contain older components such as water heaters, furnaces,

Insurance is on every condominium Board ’ s mind these days, as fewer and fewer insurers are offering to cover multi - unit dwellings. Maintaining insurance is a requirement in Section 99 of the Ontario Condominium Act, 1998 and if a Corporation is denied insurance with a local company, it can get VERY expensive. 1. What is the average insurance price you’ve noticed across the Condo Corporations you broker? CD - Corporations vary considerably, in so many ways (size, location, age, construction to name a few) If inquiring how one corporation ’ s premium compares to another, an average premium would not provide a good indicator – much the same as the average sale cost of a condominium. MS - Every Condo price varies from construction type, fire safety measures, floodable territory, amount of coverage required, claims history etc. The same replacement cost on two buildings can be drastically different given all of these measures. TB - This one is hard to answer as each corporation differs in size and construction. 2. Does increasing deductibles or implementing standard unit by-laws with insurance clauses help keep premiums lower? CD - Increasing deductibles can make a difference with some insurers; however, many programs have fixed deductibles and there is no credit. My experience is, the cost saving for increased deductibles is usually minimal and not enough of an incentive to risk the exposure. Standard Unit By - laws do not save on insurance premiums, however, they do help considerably (when detailed) in adjusting claims. A Standard Unit By - law that is described as “ bare bones ” and does not include cabinets, flooring, fixtures etc. – will save premium as it will decrease the amount insured. In addition, it may have unrealized savings down the road due to insurance claims not incurred because there was no damage to the corporation ’ s structure. MS - Increasing deductibles can definitely bring premiums down. For the by laws, it all comes

Jennifer Dickenson, B.Sc (Hons) RCM, LCCI is a condominium manager with Dickenson Condo Management and the President of the CCI-London and Area Chapter.

Chris DiPietro, R.I.B. (Ont) is an account exsecutive with Selectpath Insurance (formerly May McConville) and a past-president of the CCI-London and Area Chapter

Michael Sroka is an Agent for Desjardins Insurance operating as Michael Sroka Insurance & Financial Services

Tricia Baratta, R.I.B. (Ont) is an Account Executive with Gallagher and is currently the Vice President of the CCI-London and Area Chapter.

CCI Review 2021/2022 - 4 May 2022 Page 26

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