Why a high strata property insurance deductible might actually be a good thing!

Strata Property Insurance premiums have increased dramatically here in BC over the past decade, and it’s not uncommon for properties to be paying double what they were only 5 years ago. On top of this, deductibles have ALSO increased exponentially during this period. We used to see water deductibles of $5000 or $10000 on many properties, and these are generally $25,000, $50,000, or even $100,000 in some cases where there have been multiple claims.

Why can a high property insurance deductible be a good thing for a strata?

A higher deductible isn’t necessarily the worst thing for a strata corporation. While higher premiums are going to increase your budget and ultimately the strata fees that you have to pay, higher deductibles may actually DECREASE your strata fees, by lowering your premium, and moving the risk from the strata, over to the individual strata lot owners.

Real life example

As an example, if a unit has a dishwasher malfunction, and it floods their suite and the suite below it, and the damage is $30,000, assuming a deductible of $25,000, the strata would take over, repair the suites, and then possibly charge the deductible back to the responsible owner. The strata would be out of pocket for the $25,000 deductible, and although they may be able to recover it from the suite with the dishwasher malfunction, there are no guarantees, and it could take time to go through the entire process.

In this same scenario, assuming that the damage was still $30,000, but the strata deductible was $50,000, the strata would NOT get involved, and both owners would have to initiate the repairs to their own units through their own private homeowners insurance policies. By having a higher deductible, the strata in this situation has removed themselves from the entire process, thus removing the risk on their end. This is exactly why having higher deductibles can be a good thing for the strata. Just be sure that all owners have their own deductible insurance!

Looking for some advice on strata property insurance? Reach out to us here today!