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stratainsurance
B.C. Ministry of Finance moves to increase transparency in the insurance purchasing process BY AIDAN BATTLEY
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he unaffordability of strata or condo insurance in British Columbia, Alberta and Ontario has escalated in recent years, with the crises almost certainly reaching a peak during the current COVID-19 situation. As discussed in the Winter 2020 issue of Canadian Mortgage Broker, obtaining affordable strata insurance is a substantial challenge in the modern-day housing market. Astronomical strata insurance premiums, accompanied by hefty deductibles, have made insurance nearly unattainable for many strata corporations and their owners. The challenge for the mortgage industry is twofold: mortgage borrowers who have no or insufficient building insurance in place will be in breach of their mortgage terms, potentially triggering default proceedings, and secondly a lack of building insurance makes a strata unit unmortgageable – owners will be unable to sell their strata lots at current market prices without buyers being able to finance their purchase. For the most part, the mortgage industry has taken a back seat on taking any significant default action, as it awaits
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solutions. Recently, CMBA-BC was pleased to provide input to the provincial government on the subject. The B.C. Ministry of Finance recently announced it will deploy an arsenal of measures intended to make the process for obtaining strata insurance more transparent and conflict free. These measures include: n Prohibiting the payment of referrals fees from insurers and insurance brokers to strata managers. n Setting out clear guidelines on required elements of strata insurance to ‘help strata councils make informed decisions on their insurance policies.’ n Requiring strata corporations to inform owners about policy or coverage changes and allowing them to use funds from the contingency reserve fund to pay for unexpected increases in premiums. n Protecting ‘strata unit owners against large lawsuits from strata corporations if the owner was legally responsible for a loss or damage, but through no fault of their own.’ Additional regulatory changes include: n Fortifying depreciation report requirements. n Beefing up the minimum required
contributions made by owners and developers to the contingency reserve fund. n Requiring insurance brokers to disclose the amount of their commission, which ‘has been reported to be at times in excess of 20 per cent’. With increased transparency in the insurance purchasing process, equipping strata corporations with more tools to manage strata insurance and letting strata owners sleep peacefully knowing that they are protected from some deductible recovery law suits, the crisis will hopefully be alleviated over time. Aidan Battley is an undergraduate student at Carleton University in the Faculty of Communication and Media Studies and a contract writer. His academic research includes but is not limited to: the effect of public policy on economic equilibrium, the influence of regulatory bodies, and understanding regional microeconomic issues.
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