Although the condominium market is expanding in most major Canadian cities, insurers are being forced to charge outrageous premiums or turn away new clients as the result of copious water damage claims and insufficient regulatory measures, according to a new report from
Reuters.
In cities such as Vancouver, Toronto and Montreal, rapid condominium growth has been fueled by aging baby boomers looking to downsize their “empty nests,” as well as young Millennials and foreign financiers who view this type of real estate as a relatively stable investment.
This demand resulted in hasty construction, however, which has led to rampant damage claims, particularly water leaks.
Aviva Insurance Company recently told
Reuters that it plans to cease providing coverage to condo owners in Quebec, as increasing water-related claims and legal obstacles make it impossible to provide suitable policies to clients.
“Due to lack of regulation and an increasingly high amount of claims in the space, we would be unable to achieve an adequate premium,” spokesman Glenn Cooper told the news outlet.
Similar companies are being more selective about which condominiums they will cover, or are pricing their policies so high that clients choose to switch insurers or drop coverage altogether.
"We know it's a growing problem across Canada," attorney Armand Conant, Shibley Righton LLP, told
Reuters. "Premiums are going up and in Ontario people are concerned."
Ontario and Quebec, in the meantime, have expressed interest in passing legislation that will update laws that will better ensure quality in condominium erection and maintenance.
