In recent years, insurers of strata corporations have been hit with a substantial increase in water damage claims, particularly among aging apartment buildings and condominiums. As is the nature with multi-story buildings, water damage stemming from one unit can easily spread across floors to several units, resulting in a significant claim on the building’s insurance. In response to ongoing financial losses resulting from paying out these types of claims, insurers are not only being more selective on what they will insure and increasing rates, they are also increasing deductibles.
To reduce the impact of growing water damage and sewer backup deductibles, CapriCMW recommends strata corporations implement the following best practices:
Review bylaws to ensure a proper chargeback bylaw is in place.
Most stratas prefer to charge back all claims to the extent permitted under the Strata Property Act. In order to do so, the strata should have a chargeback bylaw with a responsibility threshold, rather than a negligence threshold. The strata may wish to have their bylaw reviewed by a lawyer.
Every unit owner should have their own insurance and confirm with their provider that there is coverage for the strata’s water damage deductible.
Most strata corporation bylaws allow the strata corporation to assess the deductible to unit owners. It is imperative that all owners have insurance to cover the full water damage deductible. Otherwise, unit owners should get in touch with their personal insurance providers to get this necessary coverage added.
Loss Prevention is more important than ever.
The best risk management tool for reducing the impact of increased deductibles is loss prevention and mitigation. Here are some key loss prevention measures your strata corporation and unit owners should be taking:
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replace your supply line
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know where water shut-off valves are located
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consider water leak detectors
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perform regular and preventative maintenance
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never leave appliances running while away from the property
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consider implementing maintenance bylaws
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consider sprinkler cages
Additionally, it is important to maintain detailed records of loss prevention measures being taken as well as any significant losses which did not result in a claim due to the imposition of a deductible. These records are helpful to have on hand for insurers to take into consideration in your future renewals.
With decades of experience and specialized expertise, CapriCMW is your industry leader in insurance and risk management solutions for condominium and strata properties. Contact a CapriCMW Strata Risk Advisor for more information.
