1. The 10-Year Evolution: From Stability to the “Hard Market”

Ten years ago, the Ontario condo insurance market was remarkably stable. Rates were low, competition was fierce, and premiums increased by a predictable 3% to 4% annually. Because insurance was affordable, many stakeholders stopped paying close attention to it.

However, this stability was a “quiet before the storm.” Rates stayed low for so long that insurance companies eventually reached a point where they were paying out far more in claims than they were collecting in premiums.

Around 2018, the market corrected violently, entering what is known as a “Hard Market.” Some corporations saw their premiums jump 30% to 50% in a single year. Insurers either raised rates aggressively or exited the residential realty market entirely. We are only now emerging from that period as insurers become profitable again and new competition enters the market.

2. The “Water” Problem: Why One Leak Costs So Much

In Ontario, water damage is the single biggest driver of insurance costs. It isn’t fire or theft that typically drives rates—it’s a burst pipe on a high floor.

Water damage in a high-rise tower is a vertical catastrophe. A single leak can impact dozens of units below it. Furthermore, modern building codes have made cleaning up a leak significantly more expensive. It is no longer enough to just mop the floor; specialized drying equipment, moisture sensors, and mold prevention protocols are now mandatory.

To stay profitable, insurance companies have raised water deductibles. A decade ago, a $5,000 water deductible was common. Today, $25,000 is the new normal, and $50,000 or $100,000 is not unusual for buildings with a history of leaks. This shifts the cost of “minor” floods away from the insurance company and directly onto the condo corporation and, potentially, the unit owners.

3. The Myth of the “Safe” New Building

Many buyers believe that moving into a brand-new condo means they are safe from insurance issues. In reality, new buildings are often viewed as higher risk than 10-year-old buildings.

During the first 24 to 36 months, construction defects often reveal themselves. Pipes may settle and crack, gaskets might fail, and HVAC systems might be improperly calibrated. Insurers call this “infant mortality” of building systems. Because of this frequency of early-life leaks, some insurers are hesitant to cover new towers, or they do so only with extremely high water damage deductibles.

4. Why “Building Limits” Drive Your Monthly Fees

Even if the insurance market is “soft” and rates aren’t rising, a premium might still go up. The reason is the Building Limit.

By law, a Condo Corporation must insure the building for its full Replacement Value. In the last 10 years, the cost of construction in the GTA has skyrocketed. Labor shortages and material inflation mean it costs significantly more to rebuild a tower today than it did in 2014. If a professional building appraisal finds that the cost to rebuild has doubled, the premium must increase to cover that new, higher limit of insurance.

5. The “Tangled” Relationship: Building Policy vs. Your Policy

As a unit owner, your personal unit insurance (HO6 policy) is inextricably linked to the building’s master policy.

If a leak originates in a unit and causes $40,000 in damage, and the building has a $50,000 deductible, that amount will likely be charged back to the owner. If a personal insurance policy doesn’t have enough “Deductible Assessment Coverage,” the owner could be personally responsible for that $40,000. This is why understanding the building’s deductible is just as important as knowing the monthly fees.

FAQ: Navigating the Condo Insurance Cycle for Owners

If there is a massive fire in a neighboring building, will my condo fees go up?

Generally, no. While a large fire is significant, the insurance market is global. It takes systemic events—such as multi-billion dollar wildfires—to shift the entire industry's rates. Local incidents generally only affect the specific building involved.
Our building has zero claims this year, so why did our premium still increase?

First, the Building Limit (cost to rebuild) likely increased due to inflation. Second, insurance works on the principle that the premiums of the many pay for the losses of the few. If the overall pool of Ontario condo claims is high, the base rate for everyone must rise.
Can the corporation really charge a $25,000 deductible back to me personally?

Yes, provided the corporation has a Deductible By-law in place. If damage originates from your unit—even if it wasn't your fault (e.g., a pipe behind a wall fails)—the corporation can charge back the cost of the deductible to you.
Why does an older building sometimes have a harder time getting insurance?

Insurers are sensitive to dated infrastructure. Buildings with aluminum wiring, outdated electrical panels (like Federal Pacific or Stab-Lok), or original galvanized plumbing are seen as high risk. Some insurers will refuse to quote until these systems are modernized.
What is a "Standard Unit By-law" and how does it affect a claim?

This document defines what the corporation is responsible for repairing (the Standard Unit) versus what the owner covers (Unit Upgrades). If you upgrade to luxury flooring and a flood occurs, the corporation's insurance only pays for "standard" finishes.
What is "Buy-Down" coverage?

Buy-down coverage is a tool used when a building has an unmanageable deductible, like $100,000. The corporation pays an extra premium to buy that risk down to something more reasonable, like $25,000. It is often used for buildings with a troubled claims history.
How does a "Soft Market" benefit me as a unit owner?

A soft market means more competition, which helps keep monthly maintenance fees stable. It’s also the best time for a Board to build an insurance reserve fund for when the market eventually turns hard again.
Why is my personal unit insurance getting more expensive?

Personal premiums rise due to the same construction inflation affecting the building. Additionally, as building deductibles rise, personal insurers pay out more in deductible assessments, which can force them to raise rates for all owners.

George has over 30 years in International Real Estate and Property Management, with 24+ years specializing in Condominium Management in Ontario, including 18+ years at the Senior/Principal level. A Registered Condominium Manager (RCM) for over 20 years, he also served four years as Chairman of the City of Mississauga Property Standards Committee.

The Great Condo Insurance Rollercoaster: A Stakeholder’s Guide to the Ontario Market

Condo Board Meeting Minutes: What Must Be Recorded to Stay Legally Safe

Beyond the Premium: A Strategic Risk Management Guide for Ontario Condo Boards