Insurance

January 30, 2024 Published by Newfoundland and Labrador Chapter - By Blair Campbell

Commercial Condominium Insurance Thoughts For 2024

From the CCI Newfoundland and Labrador Winter 2024 Condo Chronicle Newsletter

Condominium boards play a pivotal role in managing condominium insurance by overseeing the association's coverage and ensuring adequate protection for both common areas and individual units. The board’s responsibilities include: understanding the master policy, determining coverage needs, and collaborating with insurance professionals. Condo boards should also communicate insurance details to unit owners, encouraging them to obtain personal unit owner's insurance. Regular reviews of insurance policies, establishing emergency response plans, and seeking legal advice when needed are vital aspects of the condo board's role in managing condominium insurance, ensuring the financial well-being and security of the entire community.

As we head into 2024, condominium boards must continue to be ‘active’ in the stewardship of their properties. Here are some helpful hints to consider as we enter the new year that will potentially give you an opportunity to keep commercial insurance premiums from soaring.

• Loss Mitigation Policy - this is how you proactively manage your building’s upkeep. This may include having designated forms regarding a “to do list” for seasonal maintenance and repair. An example would be hot water boiler inspections and schedules replacements.
• Reserve Study - insurance companies favour having these competed every 5 years vs 10 years per the condominium act. This can mean the difference in re marketing policies to new insurance markets with more favorable rates for commercial condominium insurance.
• Short Term Rentals - insurance companies are less interested in high volume short term rentals. Simply put, if you don’t own, you’re less likely to care and the risk to claims increases. Make sure your condominium by-laws have this recognized.
• Newer Condominiums - those buildings 20 years and newer are going to be rated more favourably than older buildings. This means newer roofs, up to code electrical and plumbing. For those living in older complexes, having these upgrades completed after 20 years is a necessity.
• Out with the old - the once beloved garburators are now seen as a hazard or liability to insurance companies. Other items to address are back water values installed on plumbing lines and scheduled upkeep on sewer pipes etc.
• Confirmation of Insurance (COI) certificates - anyone who is contracted to provide services or work must be required to provide a COI. If they can’t, don’t have them work on your property, period!
• Frequency of Claims - this is a big one. A board must manage whether or not to put a claim in. This means having professionals at hand to assist on cost estimates of repair. Certified plumbers can be your best friend here. Two small claims in two years can significantly increase your premium. So be careful before you push the nuclear ‘claims reported’ button.
• Having a good relationship with your insurance broker - this is the last point for a reason. You need to trust your insurance account manager. During renewals they need to show you what they have done to get premiums down and coverages where they should be. I refer to this as “showing their homework” to you. During times of potential claims they can be of great assistance with professional advice to the board. Account managers can assist in reviewing any losses on site before deciding on whether or not a claim should be made. Some brokers have on-site claims managers who can also assist clients before a decision is determined on putting a claim through or not. Recognizing your broker works for you, you are their boss and having expectations that they provide the board with sound professional advice is to be expected. This is sometimes forgotten by board of directors.

Following these tips will allow condominium boards to display good governance and put themselves in a better position when it comes to condominium insurance.

In addition to these tips, there are a two other things to keep in mind as it relates to your condominium insurance this year. First, inflation markers are high. What will this mean for commercial condominium insurance is that you can expect an increase between a 7-8% on the total insurable value of the condominium building this year. This will be reflected in the cost of the property premium of your commercial insurance in 2024.

Secondly, claims are getting more costly and the frequency of claims are rising. Labour and materials are getting more expensive and driving the overall cost of these insurance claims higher. This makes the condominium insurance market less desirable for insurance companies to underwrite. Fewer companies wishing to underwriter this risk category means less competition and potentially higher premiums for the insureds.

Condominium Insurance is essential and the Board plays a key role in making sure you are adequately protected and have the lowest possible premiums.

Blair Campbell is Commercial Manager, Munn Insurance,
St. John’s, NL.
E-mail: blair.campbell@munninsurance.com
Phone: 709-330-5995