The Current State of Home Insurance Costs

The Complete Guide to Home Insurance Costs: Understanding Strata Properties, Deductibles, and What Affects Your Premiums

Remember when your biggest insurance worry was whether you'd forgotten to mention that time you accidentally drove through a puddle? Those were simpler times. Today, opening your home insurance renewal feels like playing financial roulette—and the house isn't exactly winning in your favour. Home insurance costs are climbing faster than a cat up a curtain, and if you own a strata property, you're getting a front-row seat to this expensive show. But don't panic just yet—understanding what's driving these changes and how to navigate them could save you serious money and a few sleepless nights.

The Current State of Home Insurance Costs

Bottom Line Up Front: Home insurance premiums have increased dramatically, with national averages rising by 21% over the past couple of years. Strata properties have been particularly hard hit, with some British Columbia condo owners seeing rate increases of up to 780% in extreme cases.

Home insurance rates in 2025 are likely to increase significantly, with the Insurance Bureau of Canada reporting that insurers paid out $8.55 billion in 2024—more than $2 billion above the previous record year. This trend is expected to continue as climate-related disasters become more frequent and costly.

How Strata Properties Are Uniquely Affected by Insurance Costs

Understanding Strata Insurance Structure

Strata properties operate under a dual insurance structure that differs significantly from traditional homeowners insurance:

Strata Corporation Insurance: Strata buildings are insured with a commercial property insurance policy, which is typically used for businesses but modified for strata property because of the ownership structure of the stratas and their commercial-grade systems.

Individual Unit Owner Insurance: Individual unit owners purchase "condo" homeowners' policy to insure their contents plus any upgrades. Two important coverages are included in these policies: 1) coverage for a portion of the strata building's deductible in the event of a major claim and 2) liability insurance to cover damages from losses that originate in the unit and extend to the common area or other units.

The Strata Insurance Crisis

British Columbia has experienced a particularly severe strata insurance crisis. The essential finding of the Interim Report is that strata premiums have risen significantly throughout British Columbia: premiums have risen on average over the past year by approximately 40%. Ultimately, the BCFSA concluded that the strata insurance market in the province is "unhealthy."

The market volatility has created significant challenges for strata property owners across the province, with many facing substantial premium increases that threaten housing affordability.

Understanding Insurance Deductibles: What You Need to Pay Before Coverage Kicks In

How Deductibles Work

A homeowners insurance deductible is the amount of a home insurance claim you're responsible for paying out of pocket. For example, say you have a $1,000 deductible on your policy and submit a claim for $8,000 of storm damage. Your insurance company would pay $7,000, and you'd be responsible for the $1,000 deductible.

Types of Deductibles

Standard Deductibles: The standard deductible is a fixed dollar amount, typically in the range of $500 – $2,000. When you have a standard deduction, the amount you'll pay stays the same, no matter the cost of damage.

Percentage Deductibles: Percentage deductibles are usually saved for wind-, hail- and hurricane-related claims. It's a percentage of your home's insured value. These deductibles are typically 1% – 10% of that value. So, if your home is insured for $300,000 and your deductible is 1%, you would pay $3,000 out of pocket.

Special Considerations for Strata Properties

A strata owner may be required to pay the strata corporation's insurance deductible. This could be a significant expense as deductibles of $25,000 are common and can range up to $100,000 or more. Strata owner insurance can cover some or all of this cost.

Importantly, if an insurance claim for a strata corporation originates in an owner's unit, then the strata corporation can sue the strata lot owner for the deductible if the owner is deemed responsible for the loss. Recent court cases have determined that responsibility for an insurance claim does not mean that the strata owner must be at fault in order to be responsible for paying the corporation's insurance deductible.

Contents Insurance: Protecting Your Personal Property

What Contents Insurance Covers

Contents insurance, typically called personal property coverage, may help protect your belongings from covered risks, such as theft or fire. This coverage is essential for protecting your personal belongings within your home or strata unit.

Personal property insurance coverage protects everything you own. It will pay to replace your personal belongings if they're stolen or damaged by a covered peril. It's included with every home insurance policy and is also included with renters and condo owners policies.

Coverage Limits and Considerations

Most home insurance policies include contents insurance at 50-70 percent of the dwelling coverage amount that's listed on your policy. For strata owners, this means your personal property coverage is typically calculated based on the insured value of your unit.

Important items to consider:

• Electronics and appliances

• Furniture and fixtures you've added

• Clothing and personal effects

• Valuable items (may require additional coverage)

• Improvements and upgrades to your unit

Keep in mind that insurers typically set limits on certain categories of personal property. These are called "sub-limits." For example, you might have $100,000 in total personal property coverage but may only be eligible for a smaller set amount for a specific item or category of items.

Key Factors Affecting Insurance Costs

Climate Change and Natural Disasters

Climate change is making it more costly for insurers to operate. Insurers' costs in 2018-2022 were higher in areas with the highest expected losses from climate-related perils. The paid loss ratio, which reflects how much insurers paid for claims relative to what they received in premiums, was highest in the highest risk ZIP Codes.

The rising costs are largely attributed to the increasing frequency and severity of natural disasters, such as hurricanes, tornadoes, hailstorms, and wildfires, which have caused significant damage to homes and properties in recent years.

Geographic Location

Geographic location typically impacts your insurance rates because every area of the country has a different risk level for damage. Some areas may have a higher risk of wind damage, while other areas often sustain damage from fires.

From 2018 to 2022, consumers living in the 20 percent of ZIP Codes with the highest expected annual losses to buildings from climate-related perils paid $2,321 in premiums on average, 82 percent more than those in the 20 percent lowest climate-risk ZIP Codes.

Construction Materials and Building Age

The type of construction materials affects the cost of your strata insurance. For instance, if the strata are constructed with fire-resistant materials, the insurance cost will be lower compared to that constructed with non-fire-resistant material like wood. Ultimately, if strata property is constructed with expensive material, the insurance cost will be higher given the high cost of replacement.

The rising cost of materials used to construct homes has significantly impacted insurance premiums. Even though inflation rates have cooled recently, the cost of rebuilding a home in 2025 is still more expensive than it was just a couple of years ago. This is largely due to the increase in the price of lumber and other materials used to build a house.

Claims History

Claims history can impact your rates in more than one way. There's a significant correlation between claims that are made and future additional likelihood of claims being made. This applies to:

• Your personal claims history

• The property's claims history

• The area's claims history

Credit Score and Personal Factors

Studies have shown that people with poor credit are more likely to file claims, so in most states, homeowners with poor credit are likely to pay more for home insurance. However, not all jurisdictions allow credit scoring for insurance purposes.

Essential Considerations for Strata Property Insurance

Understanding Your Coverage Needs

When insuring a strata property, you need to consider several unique factors:

Unit Improvements: Any upgrades or improvements you've made to your unit beyond the original developer finishes need to be covered under your personal policy.

Deductible Coverage: Due to a variety of complex factors, the cost of strata insurance has increased. That way strata owners can protect themselves and purchase sufficient insurance to meet their needs including paying for the strata corporation's insurance deductible (which can range from $25,000 to $100,000 or more).

Loss Assessment Coverage: This protects you if the strata corporation needs to assess unit owners for uninsured losses or if the corporation's insurance is insufficient.

Special Considerations

Earthquake Coverage: Earthquake is not listed by the regulation and is not required as mandatory strata corporation property insurance. However, strata corporations in the earthquake-prone areas of British Columbia are strongly advised to purchase earthquake insurance.

Flood Coverage: Overland flooding is not listed by the regulation and is not required as mandatory strata corporation property insurance. However, some flood coverage may be available under the strata corporation's policy.

Strategies to Manage Insurance Costs

For All Homeowners

1. Increase Your Deductible: Higher deductibles typically result in lower premiums, but ensure you can afford the out-of-pocket expense.

2. Bundle Policies: Combining home and auto insurance with the same provider often results in discounts.

3. Improve Home Security: Installing security systems, smoke detectors, and other safety features can reduce premiums.

4. Regular Maintenance: Keeping your home in good condition, especially the roof and electrical systems, can help prevent claims and keep rates lower.

5. Shop Around: Insurance rates can vary significantly between companies, so compare quotes regularly.

For Strata Owners Specifically

1. Understand Your Corporation's Policy: Know what's covered under the strata corporation's insurance and what gaps you need to fill with personal coverage.

2. Adequate Deductible Coverage: Ensure your personal policy covers the strata corporation's deductible amount.

3. Document Improvements: Keep records of any upgrades or improvements to your unit for insurance purposes.

4. Review Coverage Annually: Strata insurance markets are volatile, so review your coverage and rates regularly.

Looking Ahead: What to Expect in 2025 and Beyond

Looking forward to 2025, premium growth is expected to continue, but at a more controlled pace. Insurers are seeing some relief from slowing inflation, which may help keep prices from increasing as sharply. That said, the impact of potential weather events remains a wild card, especially for states prone to extreme weather.

The insurance industry has been grappling with a crisis fueled by rising costs, natural disasters and regulatory pressures. In recent years, insurers have seen their profit margins squeezed due to the increasing frequency and severity of claims. This trend is expected to continue in 2025.

Key Takeaways

Understanding home insurance, particularly for strata properties, requires knowledge of multiple coverage types, potential cost drivers, and unique risks. The key is to:

• Understand the dual insurance structure for strata properties

• Know your deductible obligations, especially for strata corporation claims

• Ensure adequate contents coverage for your personal property

• Stay informed about factors affecting your premiums

• Take proactive steps to manage costs while maintaining adequate protection

With insurance costs continuing to rise, being an informed consumer is more important than ever. Regular policy reviews, understanding your coverage needs, and working with knowledgeable insurance professionals can help you navigate this challenging market while protecting your most valuable assets.

Remember: Insurance needs are highly individual. Always consult with qualified insurance professionals to determine the right coverage for your specific situation.