บทถอดความฉบับเต็มของ Don’t Get Caught Uncovered: Insurance for Condos.

ten years. I started building out the condo program here in Ontario and I look back ⁓ over all these years, the team's growing, we're binding more policies, we've got a bit of a a name in the marketplace, so it's it's been exciting to watch it grow. Yeah, just keep rolling along. It's funny how the time the time flies by and one kind of conference to the next to a podcast. So thanks for having me on. That's speaker-0: I love that. speaker-3: Now we can test everybody. Hey, who's listening to the podcast? What happened a couple minutes in? So exciting things about ⁓ the future. I'm getting a lot of pressure from the family to buy a dog, but ⁓ I'm kind of resisting because dad always has to take care of the dog, right? speaker-1: The kid's dog is dad's dog, right? Isn't that how speaker-3: That's usually how it goes. So ⁓ Yeah, no, just excited, ⁓ excited about the growth at BFL and ⁓ all the partners that we work with and the industry is is very tight knit and close and we can get together and do all these insurance podcasts and and have a good time with it. So ⁓ thanks for having me on today. speaker-0: Awesome. So we are gonna get into some, you know, deep insurance talk, but I do always like to start off with our would you rather? So I have a question for each of you. Answer it and then also let us know why. Okay. So we'll all start with you, Steven. Would you rather explain to a board why their premium increased 35 or explain why their corporation isn't covered for a million-dollar claim because they assumed they had coverage that they never actually purchased. speaker-3: Well I'm gonna go with the first one on that. I think I could sell the premium increase, you know, all day long. There's lots of reasons for that. The million dollar loss that's not covered. That's that's not very I never want to be in that situation. But ⁓ luckily I think our product is pretty good that I'll I'll hopefully knock on wood. Never be in ⁓ in one of those situations. But yeah, I think the market's going through lots of change right now. It's ⁓ it's a soft market. ⁓ rates are really, really low. speaker-0: In that situation. Yeah. speaker-3: I don't know. So we'll see. When things turn and the market hardens and the priest prices, premiums go up, then we'll we'll start having those tough tough decision discussions. So now we're okay. That's my answer. speaker-0: Right. Perfect. Okay, Trisha, would you rather inherit a building with a board that's obsessed with keeping their insurance premiums low or one that's willing to spend more to reduce long-term risk? That sounds easy. speaker-2: Absolutely number two. A hundred percent. And I'm gonna answer before you change your mind and change the question. Yeah, it absolutely it makes so much more sense to have an educated board and one that ⁓ listens and will take the steps that they have to take in order to be properly insured. I've been in I've been in the opposite position as a broker and it's it's scary and you don't you don't want your client to ever be in an under not only underfunded but under protected situation. ⁓ yeah, that's a pretty easy one. Thanks for that. speaker-0: All right, so we're gonna I guess we're gonna start like big, right? What like what is condo insurance? What does it cover? Let's start start there. And i either of you wanna kinda jump in, ⁓ like walk through the difference between, you know, the corporation's insurance and like maybe unit owner insurance so people can understand. Because we do have some unit owner support members that listen to this and that's a really important like to understand the difference between those two things. speaker-3: Cause you wanna start with this one? speaker-2: Sure. Yeah. It is something that we talk about all the time, whether you're a broker or you're a property manager. There are two pieces of the of a puzzle. So you've you've got the condo insurance that is basically the big master policy, the one that looks after if say if we're talking about a high rise, looks after the building itself, the structure, the foundation, the exterior, and also protects the condo corporation and the directors from liability. But then you have the the unit owners policy that kind of fits in in the puzzle as well, those betterments and improvements and things that they may have done to upgrade the unit, their stuff inside the unit, and their own personal liability while inside the unit as well. ⁓ so yeah, the two are absolutely necessary to form the whole puzzle. speaker-1: So speaking. speaker-3: on Trish's comments there, the the master policy will cover things like the building structure, roof, hallways, elevators, things like that, mechanical systems, but it will not cover the unit owners' furniture, electronics, TVs, clothing, mattress, couches, things like that. So that's why it's important that they have unit owners insurance. And I find I think we'll get to that later in the call, but why it's important for unit owners to have coverage. So when there is a water loss or there is a fire, smoke damage, they can seek insurance for their personal items. So I'll leave it for now as a teaser. speaker-1: Yeah, well I th this is one of the big ones, Steven and Trish you as as we all know. What does exactly the Condo Corporation's policy cover? Because we know that it covers the corporation and the units, right? And that's that's I'm at least in my experience, that's one of the most misunderstood parts of our of our insurance coverages. So do they cover the units or do they not cover the units? You just you just talked about things that it doesn't cover in a unit, like the the contents and other things. Can you can you walk us through that a little bit? speaker-3: Yeah, so it would be in a declaration that everybody needs to review to find out what exactly the corporation is covering. And I find sometimes that's why there's ⁓ some uncertainty when when there are claims and claims teams and adjusters and people

get involved because they say, ⁓ you know, I I didn't know this or I didn't know that. But I think the declaration is an important document that needs to be referenced to find out what exactly the corporation is responsible for. We have a lot of corporations now that are I don't know for what reason. I think they're trying to save a lot of premium. So they go to these bare bones united. Where it just basically pulls out everything to the studs. And I don't know. I think the reason behind that was when the premiums are going up, they wanted to reduce the building value so they would pull out as much as they could. But in the grand scheme of things, I don't think that's a great my opinion. I don't think it's a great idea because now you're sitting could be sitting with an unfinished unit that you're trying to sell. Because you've leaned the unit or the unit owner doesn't have the rope appropriate insurance and it just kind of comes into a whole ⁓ whole can of beans. But usually standard unit definition, I think we're talking about that a little bit later. But you know, flooring, countertop, cabinetry is kind of where it it it starts. And then some people obviously ⁓ get lawyers involved to kind of adjust it and if it does go speaker-0: Like that that is happening. They are changing the standard unit bylaw to have basically nothing so that the owner the unit owner themselves have to cover all that. speaker-1: Well yeah, and that's that's probably something to dig in on a little bit right now. ⁓ so there's the the declaration, which has some boundaries, right? The boundaries between the column elements and the units, but we've all seen declarations from the seventies or eighties, right? Sometimes they're not super crystal clear. We also have what Jen just ref referenced as the standard unit definition or standard unit bylaw. What's the difference there and how do we involve that piece of it? speaker-2: 70 1976 declaration. Yes, we do look at the standard unit description. So it's the standard unit bylaw. And that is required if you have one of those older declarations. Sometimes the newer declarations are including what a standard unit looks like. But back then they didn't. ⁓ And that wasn't common. So we as a as a manager, the first thing that happens if we have a damage inside a we look at the standard unit bylaw. There's the standard unit description in there. I go to that. Daily. Some of them I know inside out and backwards, but that when it's just impossible to do that for all of them because they're all very different. As Steven was saying, some have bare bones. So there's virtually nothing that's covered by the condo if there's a loss. ⁓ and then some are very detailed as in like exactly what type of countertop and exactly what type of light fixtures. So the standard unit bylaw can really determine how much or how little the condo looks after if there's an insurable loss. And we have seen them changing. They ha they are changing. When I was a

broker, I was seeing them change with with premiums going up and if there had been claims and a corporation is at risk of potentially not having insurance, if they have one more claim, they would do their best to kind of claw back some of that, some of those finishes in the standard unit bylaw in order to avoid future claims. speaker-1: Which ultimately it not doesn't mean insurance, it means that that responsibility for insuring now falls on the unit owner, right? speaker-2: On the unit owner communication is required, right? That's not it's not just let's take it out. It's we need to sit with every single unit owner and tell them things have changed. You need to go to your unit, ⁓ you need to go to your unit owner's policy and that broker and say, Hey, things have changed. I need different coverage now. Yeah. speaker-1: Well, I can s I'll just say as a as the old guy in the room that's been a condom manager for a long time, I I was managing before the requirement for standard unit bylaw existed. It's so much better now. Like it it it when those now that we have that clear definition and you can just go like you said, that's that quick reference. That's the first thing you do is go there and look what's covered by whom. it just it it helps us all figure out when there's a loss, what what to do. speaker-3: Good that the industry is evolving. ⁓ that's what you sound sound like you're alluding to, Brad. And I think things are always changing, which is a good takeaway. And maybe that segues into the next bit with deductible chargebacks and how there never used to be that because deductibles were so low. And now with all the water damage and fire and claims and the landscape, at least in the GTA, with this the number of buildings that have gone up and they're now 1200 unit. high rises. It's just it's insanity. So with that change becomes, you know, things in the act that also change. And I just think people need to be aware whether they listen through podcasts through CCI or ⁓ attend in-person events. But you know, deductible chargebacks are a th a real thing now where water damage deductibles are twenty five, fifty thousand dollars, you're the unit owner that causes that damage, you better have insurance to pay that deductible if if the corporation becomes knocking because you're the one that ran the bathtub for your your child. speaker-0: That's great. speaker-3: Run the dog runs out in the hallway and then the door locks behind you and you can't get back in and it floods. speaker-1: Tell us first of all, what is a deductible? Like no explain the deductible. speaker-3: Yeah, so the deductible's the portion of the insurance policy that ⁓ the policy holder is responsible for. So there is some skin in the game there, so to speak, where you you do have to pay that first deductible once once a claim happens. It's not just free money or free insurance policies. There is some ⁓ risk risk kind of with it. But ⁓ yeah, I think back when you were managing Brad, deductibles for water damage were twenty five hundred bucks. And I think we had a a frequency issue across the industry. And all the insurers kind of got together five years ago and said, This is crazy. We're paying out all these small claims. Insurance is really there for the big stuff. And they then increased the water damage significantly up to 25,000. And I think that's kind of where the industry standard is. Because of all these frequency claims within the condominiums. speaker-0: Standard now. Yeah. speaker-3: Is the insurance way insurance companies way to kind of sustain the frequency or just pause that frequency of all these little claims for carpets and flooring or whatever the case is and and really put it there for the larger claims and now that deductible has gone up, which the corporation is responsible for. So it's important that every unit owner understands what that deductible is in case they are charged back for that portion of of the policy. So that's kind of my my two cents on it. speaker-0: And so if the if they are liable for the issue, then they then the corporation can charge it back. So you have to have that additional deductible chargeback. speaker-3: Yeah. speaker-0: on your unit leg. Otherwise you're paying for it out of your bank account. Or you're getting a lien or whatever. Yeah. speaker-3: Yes, crazy. speaker-1: Okay, so so here's the here's the condo manager question, Tricia. So we know now deductibles, especially for water loss, are are fifteen, twenty-five, fifty thousand, sometimes higher. So as a manager and working with the board, when there's a a water loss, if it's gonna if your deductible is twenty five thousand and the water loss is going to be fifty thousand, what is the what's the board do speaker-2: Yeah, it's and it's a hard question every single time. It's a discussion that the manager has to have with the board every single time. Again, do you have the funds? We are seeing rates going down for insurance. And the first thing that the board wants to do when it's time to set in a budget for the next fiscal year is, you know, bring that budget line down because we don't have to pay that much for insurance anymore. So we shouldn't be putting that much money aside. And managers are, No, let's keep that money set aside, right? Let's make sure we're saving that money because. Those deductibles are bigger. And if we do, in fact, have a loss that we need to pay out of pocket for or we hit need to pay a deductible for that $15,000 or $50,000 water loss, then do we have to use insurance or do we have that money set set aside because we were prepared? That little bit of contingency money that we put there just in case. That is a discussion that I am having at every budget meeting because it's not gonna stay low. We know that insurance does this. But when it comes to do they make a claim, I've always seen insurance as being used in financial hardship. Do you need to use insurance because you can't pay for

it? Or do you need to use insurance because paying for it will cause too much financial hardship? If the answer is yes, then absolutely use insurance. But again, going back to what Steven was saying, when the deductibles were low, we used it too often. It was like a part of our maintenance plan. Well, we'll just use insurance if we need it. So that that whole mindset has to shift. And that's something that I work on with my boards is The money premium might be lower, but the deductibles are higher. So we still do need that money there. speaker-3: This episode of Condos Unplugged is brought to you by Thorne Property Management. A well-run condo corporation depends on strong communication, steady organization, and a management team that understands the needs of both boards and owners. Thorn Property Management works alongside boards to help keep day-to-day operations on track. Coordinate maintenance, support clear communication, and assist with planning for the needs of the property. With a focus on responsive service and trusted guidance, Thorne helps create communities that are organized, informed, and well cared for. To learn more about Thorn property management, visit Thornproperty.com. Just a piggyback on that bit with the deductible areas, ⁓ Steve, when do when do we put in a claim? And I think back When deductibles were twenty five hundred dollars, everybody said kind of two to three times. Well, if you take a twenty five hundred dollar deductible and two to three times that is like five, ten grand. Well, that's still bel fifty per fi a hundred percent below what the deductibles could could be now. So, you know, two times a twenty five thousand dollar deductible is fifty. So it's it's significantly increased, but I think Call your broker, lean on the broker, have the conversation with the broker, find out what the loss history is like of the property. Have they had multiple water claims? Have they had fires? Or is this their first claim? And I think those things can help the boards decide whether they move forward with a claim or not. I think ⁓ the broker isn't utilized enough in understanding the policy and and what's covered or what limits or claims and ⁓ those things all help make decisions on whether they should move forward with a claim or not. speaker-2: We're pretty lucky here in London. Sorry, Jen, we're we're pretty lucky here in London right now that, you know, ten thousand is kind of where we ha we are seeing our water damage deductible. And that is for the corporations that haven't had water losses in the last, you know, five, ten years. So we're still well, we're predominantly townhomes as well in London. We do have high rises, but we're predominantly townhomes. So I can see why a high rise would need a twenty-five thousand dollar minimum. You you have water one place, you're gonna have it a lot of places. So thankfully we're not quite there yet. And it just it it does add more work to the property manager, right? If we're not making a claim and we're not handing it to an adjuster and they're not looking after it, then it lands on the property manager to do most of that stick handling. So hopefully it stays there. Yeah. Yeah. We hire it just adds to the manager's plate. speaker-0: Absolutely. Now let's talk about claims for a second there. What are the most common claims that you are seeing now? ⁓ both of you. speaker-3: Water water for sure. Yeah. The number of units. Fire a little bit's kinda crept back in, just kitchen fires, ⁓ pots with nothing in them that somehow erupt or microwave fire. Balcony fires usually in the fall. So this is the asterisk in the in the podcast where all those planters, those dried out planters on the balconies in the fall. Make sure you throw them out 'cause cigarette butts usually end up in there and sometimes they blow off the balcony and somehow you know Bullseye land read in the pot and then it starts to fire. So make sure you throw those planters there at the end of the year. speaker-2: It's water. I mean, I I think I've seen a fire once since I've been back in in condo management. But yeah, it's just it's water and it's just constant reminders to unit owners and residents. You need to check your the fittings on your toilet. You need to constantly be remembering, you know, once well, you need to be remembering that there are ways in your unit that can leak, even though you didn't touch them. You didn't turn the water on. There's still ways for water to come and be a problem, like the the fitting of the hose on your back of your refrigerator. And the hose and the dishwasher, those tend to be the ones that leak and no one knows it's happening until it's been going on for a while and causing lots of damage. speaker-0: Coward, what about slip and falls? Cameras cameras on properties have have a significantly reduced slip and fall, right? It's cameras because people can't take it. speaker-3: you know, just the sheer volume of people living in these buildings. It's only ⁓ a matter of time and I don't know how much I should say or shouldn't say, but it's kinda like that show America's funniest videos where you you see these people and the video comes in and it's like, ⁓ we've had a slip and fall and you just look and you're just like here we It's it's it's usually the late night ⁓ returning back home. Maybe people are wearing high heels and carrying things and speaker-0: Yes, express. Yeah. speaker-3: I don't know, it's just ⁓ yeah, common sense maybe not so common sometimes. Right. It's fair. Definitely you know, it's good to have the videos, it's good to have reference back to that where maybe they didn't have those back in your days, ⁓ Brad, when ⁓ what is video recording? What is all this sort of stuff, right? Hearsay speaker-1: No, yeah, I think I think the ⁓ proactive management now, right? We have we have site inspections, we have logs, we have photo reports, we have our landscapers that are proactively reporting on conditions and

taking videos and images and there's just so much more data available to us now to to protect the corporation, but also make sure the ma the property is being managed well. ⁓ I mean that's it's both both things happen at the same time with those with those tools, right? So yeah, I think there's a lot of improvements there for sure. speaker-3: Sure. speaker-2: Thank you. speaker-0: So unit owner insurance, there's a s there's a staggering number that I've heard so ⁓ so often about. Actually we've talked about this on another podcast. Fifty percent of unit unit owners don't have insurance. That's terrifying. It's nuts. Yeah. Tricia, do you collect COIs from everybody? speaker-2: No, no. We don't have any teeth to enforce that, unfortunately. We the the Condo Act is very clear that the Condo Corporation shall and must have insurance. But it's pretty vague on what the responsibility of the unit owner is with or the sorry, what the responsibility of the corporation is to make sure that unit owners have insurance. So we can certainly ask for it and we we mention it in every s communication that goes out of our office to that the corporation of reminder of insurance. But as as soon as when someone buys a unit, they have to have insurance to show the mortgage if they if they need a mortgage, to show the mortgage company. But anytime after that, if it if it doesn't get paid, the premium doesn't get paid and it gets canceled, we unfortunately aren't a certificate holder on their insurance. So we don't get notified. Yeah. speaker-1: And and I can actually add that to that on purchase. Some the mortgages aren't the police always because sometimes they'll just take the corporation's policy and that's good enough for the mortgage company's coverage. Which is back to our earlier discussion, that's why that's one reason why ⁓ condo corporations must ensure units, right? It's to protect everybody, all the all the owners, in case someone doesn't have it. So at least there's some basic coverage for every unit, right? But it is a problem. speaker-3: Is it always seems to come up and it's come up over my career vaguely and it's like well how do we do that? How do you police it? And it's just exactly what Trisha said, right? Somebody'll buy a policy to satisfy the mortgage and they'll cancel it the next day. And because policies usually renew on an annual basis, you'd be down a rabbit hole trying to track all these people in an eight hundred unit building and it's an admin. I don't know how you do it. ⁓ speaker-1: And Trish, we know we know that the manager would be responsible for that if it was a requirement, right? Like that would be our job, rather and and just another thing to try and track down and and hunt. ⁓ yeah, it's a it's a problem. speaker-2: And from a manager's perspective, if in fact we have a loss and multiple units are affected and we have units that don't have insurance, the major problem for the management company and and or and for the condominium

corporation is the stuff. It's the unit owner's stuff or the tenant's stuff, right? We need that we need to get into that unit and and move everything out so we can either dry it out or we can repair it or but it's the stuff, the coverage for a unit owner or for a tenant. is what pays to move their stuff out. So who's responsible for that? Right? If the unit owner or the tenant doesn't have insurance and we need that stuff out, then the condo corporation ends up having to move that out and hopefully trying to recoup that cost by charging it back to the unit owner. But again, chargebacks are a whole other episode of on a podcast, I can imagine, but it just makes for a whole lot more moving parts and we don't necessarily know what the end result will be. ⁓ as soon as we move their stuff, then are we responsible if we damage their stuff further or we lose their stuff, you know? So it's it's a it's a big deal and a lot more work for everyone if if there is an insurance in place. speaker-1: I'm almost afraid to ask this question, but should the Condo Act put some requirements and some teeth in owners requirements for insurance? speaker-0: Yes. Look at Steven's smile. speaker-3: That's such a loaded question, Brett. Yeah, the actual regulator is there to regulate and if they can figure out a way to regulate some of those people without insurance, then I think that just helps everything in the speaker-0: But they have to it's just so Yeah. speaker-2: ⁓ As a manager, I see that there's a huge plus if the Condo Act says that unit owners have to have insurance and that they're in breach of the Condo Act or you know they're in breach of the legislation if they don't have an insurance policy. But again, going back to what you said, Brad, how is it policed? Who is responsible for that? And does that just add another layer of what a manager is responsible to keep track of? You don't know what the answer is, to be honest. speaker-0: Tough and and also it it matters that you have the right type of insurance as well because you know, I I live in a common element or vacant land condo, my home, and a a a neighbor about a year and a half ago asked me to review his policy and he had a standard he had a s insurance for a standard condo. So that doesn't cover your roof or your windows and your all you know, all those exterior And ⁓ so that's also something that it could be a a large problem. You know, thank God nothing happened. We're a new community, like there's you know, nothing nothing happened. But that could that you don't know how many times that's gonna be a problem as well, and how many people have the wrong insurance. W you just need, you know, homeowners insurance when you have this type of condo versus standard unit. speaker-1: Okay, so here's a real question, and I'd like to know how you guys have solved this in your careers. When a condo corporation can't get insurance, when when they've been canceled and they shop around and they they cannot get insurance for various reasons, what what what do they do and what does the manager and the board do in those situations? And how do you guys help? You've you've all you've you've all you've all faced this. We face this, I know, and this is real. Like this is this happened. speaker-3: ⁓ boy. We like those tricky ones where Yeah. Well, it's not a good situation. It's boiled over. It's it's come to this point where insurers are now non-renewing policies or or you just can't get insurance due to ⁓ losses, a high loss, ⁓ ratio, poor, poorly updated building, and they happen. I'd like to say it's not often because they're absolute nightmares to try and sort out. ⁓ you really don't want any building uninsured, but sometimes they get to that. And then my experience. on on some stories or some hearsay of of those properties would be ⁓ you know, they're self-insuring it or they need to come up with some sort of reserve fund or not a reserve fund, but a an operating expense or operating budget that would have a million dollars in it to pay that million dollar deductible. Like you might be able to get a building insured, but they're gonna have million dollar deductibles and your premium is going to be astronomical. So it's it's kind of like We'll get you insurance. You're not gonna like the price. Yeah, where you know, if you do have a million dollar deductible, you've got to have a pretty big claim to to trigger the policy. So basically anything under that million dollars, they're paying for. So it it it's really now becoming a control of the frequency, like we can't have water losses, we can't have fires, and it's now falling on the manager to try and regulate and police and ensure that all that sort of happens. speaker-1: Basically self insured, yeah. speaker-3: Whether leak detection gets involved or other systems kind of come into play to to help get that bad the bad child, I guess, back to a reasonable level of insurance. I think deductibles again, we talked about it earlier there to kind of regulate that. And if we do need insurance, we can get it. But you're not gonna like the deductible and you're not gonna like the premium. And that's just what it is. And it's kinda like a ⁓ you know, a bad bill of health of the doctor, you gotta do what you can to to fight to get to get back to good health and and that's kind of what the insurance world s you know, mandated to do that. speaker-2: From my experience, thanks Jen. I've seen a condominium that had, for example, aluminum wiring. And the board either wasn't aware or didn't really understand the gravity of having aluminum wiring and the potential for fire and simply didn't want to get the inspections done that they needed. They didn't want to pay for that. The units inside the units, the electrical inside a unit is the unit owners, right? So we shouldn't have to pay for that. Well, if you have eighty units and there's aluminum wiring. through most of them. And you don't know who which ones have aluminum

still and which ones don't. When we were in the harder market, there were insurance companies saying, well, if you don't get it inspected, then you don't have coverage for fire. So you have eighty units with essentially a named perils policy. You have all of this coverage except fire. And that's that I mean, I've seen that, unfortunately. And I worry that that could have been something that could cause huge liability and a DNO claim against the condo cor the you know, the board, et cetera. So I thankfully none of my condo corporations are in that sort of position. But yes, I've seen it and it was hard to sleep at night knowing that there's a condo out there that doesn't have fire insurance. And it might speaker-3: be a good segue into kind of like market market trends. I don't know if we're talking about the best in class, you know, policies, but ⁓ you know, we haven't had any big weather events recently. I think we're due for a a rainstorm, a big rainstorm with some flooding. I can't remember It's been a couple of years now since the TCC and the subway and union station was flooded. Remember, we get that big downpour in the city and people are all rus rushing to get out of there and the union station's flooded and got water up to your knees. ⁓ you know, usually the weather events cause premiums to go up, rising construction costs. Inflation in the marketplace, water damage frequency, we kinda touched on those. One with the elec aluminum wiring is the aging infrastructure. And I think we were chatting just before we started the recording on the podcast about ⁓ how time flies. And before you know it, the building's twenty, thirty, forty years old and it's got aluminum wiring and premiums start to go up in a hard market again, usually happens every seven years. What do we do to get our premiums back down? Well, you've had this aluminum wiring and you've known about it for a couple of years. You haven't done anything about it. You know, just paying attention to the building itself. If it's older, roofs need to be updated, plumbing needs to be updated, aluminum wiring needs to be pigtailed or replaced. We still see properties with fuses that need to be updated to circuit breakers. So all these things kind of tie into the premiums that are being paid. And when everybody kind of screams that they get the renewal and ⁓ the rates went up. Well, what have we done to, you know, identify those 10 things I just named to to reduce your premiums? So yeah, I think just talking with the broker and figuring out what what's going on in the marketplace to help make it a best in class property. speaker-1: So so Steven, you you've referred and Trisha's referred to soft market, hard market a few times. Can you walk us through what what that means specifically and where we are right now and why we're we're here? speaker-3: Great question, Brad. We're in a soft market right now where there's an abundance of capacity. There's a lot of insurance companies that want to get

into the condo space, the realty space. Rates are low, premiums are low due to competition. It will take a large maybe weather event or fire or some large I don't want to say earthquake. We don't really have that here in ⁓ in the GTA, but in BC we may. Obviously, there's a lot of rate in the premium for quake earthquake exposure. You know, maybe we could have a quake. They're happening in other parts of the world right now. That would cause the market to harden and that would cause rates to go up because the reinsurers or the insured insurance companies, insurers need to pay for a large loss. The premise of insurance is the losses of the few are paid by the many, which is everybody. Yeah, we we would see that hard market. It happens every seven years. I don't know what what causes it to happen, but it slowly starts to turn where the rate has deteriorated in the market. So the insurers are saying, ⁓ actually we're losing money in this class of business. speaker-1: But like and and is that just a f ask on that. It's it's like kind of the margin between what they're collecting on premiums and what they're paying out on claims. Is that speaker-3: Yeah. Sometimes, you know, being the insurance guru, I get down these rabbit holes and start using terminology that maybe the general public don't understand. And I'm trying to keep in layman's terms, but yeah, they start paying out more than they're collecting. And that's when the market starts to turn. Maybe insurers lose money on the class of business and they say, Hey, we're either out of this business or we need more premium. And then that kind of trickles and then other insurers start to charge more. And then slowly the rates start to clip creep up. So Right now we're in a soft market, premiums are as low as I've ever seen them. speaker-0: Yeah. Yeah, which is not ⁓ speaker-3: It's just competition, competition in the marketplace. ⁓ couple factors and it just causes it to race to the bottom and nobody likes to win on price because it's just it's just not sustainable and it's gonna turn. And then I know people like Trisha are trying to plan for corporations' budgets and what's the premium gonna look like next year, when's that market gonna turn? And then everybody's kinda like, ⁓ the market turned, we didn't plan for it, now we've got this huge expense in the insurance, so it's really a tricky spot to kind of plot on the chart, like where we're at, but it is definitely soft. Rates are low. So I would just expect to have some sort of contingency where when the rates do change and the premiums do go up, that there is some kind of money there. And I envy Trish because I don't know how you balance these budgets and Brad, like it's there's so many moving targets. The economy's in a weird spot and everything kind of seems to keep going up except for insurance premiums. speaker-2: I think it's really important to remember exactly what you said is that it's cyclical, that, you know, people will say, Well, why is it so low? And and we shouldn't plan for well, we should we should bring the budget number down because it's so low and it's just not it's not sustainable. It won't stay at that level. The insurance companies need to make money. And one of the important things for managers is just to continue to educate brokers as well, just to educate boards that this isn't a forever thing. We need to be prepared. We don't know when the next catastrophe could happen and insurance could go up. We could have one here in London that takes out, you know, our river f overflows and we've got condos rate on the river. And like it even that can make a big dent in the rates. It's all about where your condo corporation is geographically and what has happened in that area recently or in the last 10, 15, 20, 50 hundred years, right? And that's how they determine what the rate is for your particular geographic area. And if we do have a flood and the Thames River over like flows over its banks, London will have a higher rate of insurance for going forward for probably forever because we're expect we would expect that to happen again at some point. I'm very relieved that insurance is low right now. It's been very hard for condos. We we've been we've had seminars, webinars of the condo insurance crisis over the last five years. So it's really a nice time for condo corporations where this is not what they have to worry about financially. They have enough to worry about financially with inflation, with the cost of doing business, with all prices in every sort of every industry going up, that this is one place where they don't have to be afraid right now. Yeah. speaker-1: Well and by the way, I'm just thinking now, we're soft market. Why don't we get creative and like lock in for a three year insurance term? Why why won't companies do that? Wouldn't that be nice? speaker-3: They know that market's gonna change, Brad. The winds of change. What song? Who sings that song? Is that the Scorpions? speaker-1: ⁓ Jen, do you want to get into some ⁓ the scenarios? speaker-0: Let's do some real life insurance scenarios. Okay, so the upstairs, the first one is the upstairs leak. A washing machine hose fails in a unit on the twelfth floor. Water travels through five units before it's discovered. The damage is extensive. Nobody can agree on whose insurance should respond. So who is responsible for this? Even if it was an accident. speaker-2: Look read to the con standard unit bylaw and then who's we would look at the governing documents. So one of those one of the major points of confusion for for anyone in insurance, but mostly in condos, is who's responsible. And when it's condos, we've got the condo policy and we've got the unit owner policy. The most important thing and we what we do first is we look at what's damaged. We're going to find out later who's responsible and who's gonna be responsible for the deductible and all of that, but Right out of the gate, the insurance policy that is

going to be triggered is the one where they're that is responsible for whatever is damaged. So that would be the first thing we would do, 100% look at the governing documents and decide who's responsible, whose policy is responsible. speaker-3: This episode of Condos Unplugged is brought to you by BFL Canada. When it comes to condos, insurance is more than just a policy. It's an important part of protecting the building, corporation, and people who call it home. BFL Canada works with condo corporations, boards, and property managers to help them navigate coverage, claims, renewals, and risk management with confidence. Every community is different. And BFL Canada helps clients better understand their options so they can make informed decisions for their properties. To learn more about BFL Canada, visit bflcanada.ca talked a little bit earlier about the deductible chargeback, ⁓ unit owner's insurance, and the master policy. Each unit owner needs to provide or have a policy that covers them for any property damage or bodily injury. So they've caused property damage by having that. fault whether the hose is their fault or not, everybody should be inspecting their ⁓ dishwasher hoses. They do become brittle and dry out. That's kind of the unit owner responsibility, maintenance. And ⁓ it would be likely their responsibility up to the deductible. If there is a deductible chargeback bylaw, the corporation then could go back for that. But ⁓ you know, the damage to the elevators and hallways ⁓ will would be on the corporation. speaker-2: And as a manager, I'm thinking, great, this is gonna be fun with lots of different units affected. Like you could look at it one one of two ways. This is exciting. It's an adventure we get to solve this problem, or it could be one of those situations where we have a whole bunch of units with no insurance. So it could could be great or it could it could flow nice and smoothly or it could not so much. The challenge the most the most challenging is though when you have a lot of different units affected and they all have their own individual unit policies. They all have different insurers and they are likely to use different restoration companies or want to, or their insurance companies are going to say, ⁓ so let's say they the water's coming down into their unit, they pick up the phone and they call their insurance company for their unit policy. And their insurance company is going to wanna send, you know, A B C restoration. ⁓ And the unit above them, their insurance company is different, and they're gonna want to send DF and restoration, right? But then we also have the condo for the common elements and for the standard unit. And the condo's insurer will wanna send their restoration company. So it gets it can get tricky if if there's multiple units involved. speaker-3: This might be the best time or the best part of the podcast right now. I don't know where it's come up or what came from my the forefront of my brain, but choosing the lowest premium is not always the best option. Yes. Each insurance product is different. And you need to understand what you're buying. Yes. And I don't know why it's become this way where everybody just races to the bottom on price and I know what's a lie on lie on the budget. speaker-0: Amen. Yes. speaker-1: Yeah. speaker-3: But if you don't know what you're buying, you could be missing out on massive advantages or coverage savings, not just saying it's the night before the renewal. We need it's price, it's price. It's like, well, yeah, but when you have a claim, what did you buy? Did you buy the, you know, Fort Pinto or did you buy the Ferrari of coverage and how's it gonna respond? Because you know, the difference in a policy between one to the other could be massive in helping the community. And I think speaker-0: And ultimately that overlooks. Yeah, and that's the board's responsibility to make sure that you're picking a product that has a coverage that will help your community. speaker-3: Or I don't expect the property managers to be insurance experts, but at least give the broker a call and have the opportunity to present or maybe identify some of the differences in coverages because it just for whatever reason it's come that way where it's just like price, price, price, price. And I think there's a lot of people that are missing out on potential coverage options ⁓ without even really knowing it. speaker-0: Yeah, absolutely. Okay, let's get into second scenario here. ⁓ I'm gonna go to the renovation surprise. So, Trisha, you had talked about ⁓ improvements and betterments in the beginning of ⁓ the of the podcast, but that's kind of what this is. So an owner completes a full kitchen renovation, up upgraded appliances, custom cabinetry, premium finishes, the fire destroys the unit entirely. Master policy pays out based on standard finishes. So the owner's expecting a full replacement. How often do you guys see that? Well we speaker-3: We get questions about handy people that like to do their own plumbing. Maybe this could kind of tie into your question, Jen, about ⁓ them updating or improving. To answer that question, I think you need to call your insurance broker and say, Hey, listen, I've taken the carpet out of my unit and I've put marble down. It's very expensive. And that insurance broker will insure the marble or insure the granite countertops, insure the oak cabinetry. Yep. speaker-0: One more. speaker-3: Above the standard unit. Right. So that unit owner will have insurance for their betterments and improvements. The other piece of it was that handy person's work where they want to do some plumbing to install the day and they don't know what they're doing. The solder doesn't hold. Now we've got a claim. So I think it's important to have those deductible chargebacks. So you're able to go back to that handy, you know, unit that wants to do those improvements on approved, I guess, or they're not a licensed trade and

something does happen, you want to make sure the corporation is able to charge back that deductible to the unit owner. speaker-2: It's important too from the very beginning, the the the communication. So as a the the condominium board or the manager needs to be in commu this this needs to be communicated to all the unit owners that when you have your own policy, it's different from the condo's policy. Here are the things you need to make sure you have in your policy. And if you make any changes to your unit, this is what you need to do. And that could that just needs to be communicated all the time, it seems. We know we know that status certificates say some they they say a lot about the the condo and what the responsibilities of a purchaser are and what the responsibilities of the condo corporation are. But we don't see enough people reading them. We don't see enough people knowing what they're buying. You are buying, you are not buying something that is is has no responsibility where you where you have no responsibility. Here's the responsibilities that you have as a unit owner. And It doesn't matter, you know, if you bought a condo and you have no idea what you bought and you say, but I didn't know any of that, you still that's your responsibility. You are a unit owner now. You need this policy. And making sure that the manager or the board is always communicating over and over again, unfortunately, because we find that people will read sometimes, but not all the time. So as many times as possible, communicating what the what the unit owner's responsibilities are. ⁓ speaker-3: That's good. I think the yeah, reading and understanding is is the big thing. Education, right? If you are making a decision on a vending machine on which chocolate bar to buy, the impact is is is very low. Get a Kit Kat instead of a coffee cris. But the policies are where you're spending thousands of dollars and need to understand what you're buying. That's just it's just so important to read and be educated. speaker-0: What advice would you give? I'm I'm a board member, so I I sit on my my ⁓ condo board. When we get renewals, right, the the property manager will flip the you know the renewal package and then perhaps we've gone to market to look at other options. What do you want board members to look at and understand about these policies and when they have them side by side? Like what are the most important things that you want to communicate to that? speaker-3: most important things, just understanding what you're buying, because not every policy is the same. You just want to make sure that it's not about the premium. It's about the liability. It's about the legal expense. It's about crime coverage, about directors and officers coverage, human rights coverage. Like the Condo Act states you need to have liability property and equipment breakdown and I think DNO if it's readily available. So the act is kind of very relaxed on it. There's also crime policy, there's crime coverage. Like there's so much inside of an insurance policy that I don't think the boards fully understand. And ⁓ if you can set out twenty minutes or thirty minutes at an AGM to listen to a presentation, you know, I think there's a lot of information in the podcast today. But if you have a a direct focus on your corporation. with your insurance broker that'll be able to provide you with so much information in a short period of time on all those things, right? These these older corporations have large reserve funds that are set for future expenditures on windows or parking lots or whatever it might be. Whoever talks about that money being absconded or s or or stolen, ⁓ that's part of the insurance policy. Yeah, this is just so many things and so many important pieces to understand. I think my my takeaway for the boards would be just to to review it or just to allow thirty minutes at your AGM to understand what what is covered and what is not. speaker-2: covered I would say it's important that boards rely on their manager. Your manager has if you have a manager, your manager has been through a lot of claims, whether they love it or not. They've been through a lot of claims with their clients. And if your property manager is saying, well, I've worked with this insurance broker and I know that they take care of this throughout the you know, throughout a claim, you are going to be taken care of. There will be communication. I haven't seen coverage gaps or sublimits, then it's important to rely on the manager's experience. And I find directors do really want some they they do really want to rely on the manager, but it's not just them. There's three of them on a board or five of them on the board. And as Steven said, the if you buy the lowest price, you may be getting the lowest value. You may be getting, you may be missing what that broker can do for you outside of the insurance policy. Like just being able to reach them on the phone and ask the questions from being on both sides of the fence, as being having been a broker and now a manager. I know what a broker can do and I've worked with worked with my clients as a broker to help them through a claim. And I am now a manager and I've worked with a number of brokers and see how they help the client, help the condo corporation through a claim. And insurance is Obviously expensive. It's one of the one of the highest ticket items that a a condo corporation will spend their money on every year. But as Steven said, you get what you pay for in a lot of circumstances, whether it's a roofing company or a deck company. Insurance is the same. It's it's very important that you trust your manager, that you trust your broker, and you let them help you find the right product that you're going to need. Because ultimately insurance is about the claim. It's if you have a claim, you need it to one, cover you for what you've lost. protect you financially and make it as easy as possible to get back to pre-loss

condition. And from a from the manager's perspective, they've likely worked with a bunch of different insurers or or brokers and they know which ones can be challenging to work with. And they know the ones that you're going to get what you need from them when it matters most. When you have speaker-1: are by the way, our condo experts. That's important, right? In our space. Tristan, you that's a great point, not just for insurance, by the way. Like yes, to Steven's point, we need to we need to be comparing apples to apples on policies so we actually know what we're looking at and coverages. But that service piece of it is huge, right? And that's not just for insurance, that's for condo managers, by the way, landscapers, all the service providers. It's not just the price and the scope that's listed. It's also that level of customer service that they provide and the expense speaker-2: Are they gonna be there for you? Right. Are they are they gonna give you what you need when you need it? Yeah. speaker-0: Yeah. Okay, we only have a few minutes left, so I wanna get into the rapid fire questions because that's my always my fate most favorite part. Okay, so we're you're gonna answer it as fast as you can. And I'm not gonna tell her which one should I s should I start with. I'll start with Trisha. Okay, you ready? Most misunderstood part of condo insurance. Trisha, one thing every condo board should do differently at renewal. speaker-2: Stephen said, talk to the broker, listen to them, hear about the changes that have happened on the policy. speaker-0: Steven, most expensive insurance mistake you've seen. Tricia, most commonly overlooked coverage. speaker-3: Not reading the policy. speaker-2: I would say property. They're not insured. Property values. Property. Not insured value. speaker-0: Yeah, T I V. ⁓ Stephen. speaker-1: We didn't about appraisals did we today? Like we have so much more. No, but speaker-3: Getting a chance to speaker-0: Two of these. speaker-1: Right. speaker-0: Biggest surprise in the condo insurance claim. speaker-1: I'll give you time, Steve. I'm gonna throw one in. How long it's gonna take to get the unit back to living conditions? speaker-3: Yeah. You kinda you Jen, you opened up like a can of worms there. You're like, ⁓ claim. And I'm like, yeah, that fire and that townhouse that's not gonna be rebuilt for the next year. So I think understanding the policy, this is a sore, sore spot for me because that townhouse that burnt down is not gonna be back in a month. You're gonna be ⁓ you're gonna be living somewhere else for a year. Yeah, it was kind of a shocking one we recently had. So I you got me. You got me. speaker-0: Yeah. Yeah, for a year. There we go. Trisha, best way to explain insurance to an owner who just doesn't get it. speaker-2: What insurance is triggered is what's is related to what's damaged. So obviously we care about who caused it and what caused it, but more importantly, the policy to fix it is the one that's covering the thing that's damaged. speaker-0: Steven, one condo insurance trend that worries you. speaker-3: the unknown marketplace, just where things are gonna go. speaker-0: And Trisha, last one, one condo insurance trend that gives you hope. speaker-2: That gives me hope. Yeah. ⁓ I think it's I think it would be ⁓ that that the hard market makes us educate and and we get educated and then we educate our clients, our directors and our our property managers and and more more ⁓ seminars at C CI about insurance. speaker-3: Brokers like Steven. speaker-1: Yeah. speaker-0: And podcasts. That's right. All right. That's our rapid fire. So I think we are we are closing out. Brad, are you gonna close for me today? Are you gonna make me do this? I'm the closer. So today's conversation is a reminder that condo insurance isn't just a policy document, it's a safety net. speaker-1: You're doing it. You're you're the pro. You're like speaker-0: And it like any safety net, it only works if it's the right size, the right place, and checked regularly. A huge thank you to our guests for bringing ⁓ both the insurance expertise and the on-ground property management perspective to this conversation. The combination of those two viewpoints is exactly what condo owners and boards need to hear. So thanks ⁓ for tuning into condos unplugged. Please like, share, follow ⁓ wherever you wanna listen to us. And what's that? Subscribe. And subscribe. I never get that one. You always have to remind me. ⁓ because in condo insurance, the surprises are rarely the good ones. So thanks for joining us today and ⁓ we'll see you soon. speaker-3: Thanks everybody. speaker-2: Thank you.