Residential Realty Review & Best Practices 2021
We regularly communicate and consult with the markets that provide insurance coverage to condominium corporations. Our advisors work diligently to keep up with what the insurance markets are doing regarding capacity and rating. We stay on top of and review all of our client’s policies and make sure to remarket when rates increase. We often collaborate with the insurance markets to find ways for condo corporations to combat their risks and potentially avoid rate increases.
Current 2021 Residential Realty Market Condition
The insurance markets continue to take aggressive steps towards addressing the residential realty market’s adverse loss experience. Residential reality risks as a whole continue to suffer ever-increasing losses with the primary type of losses being water-related. The insurance marketplace implementing two strategies to hopefully bring some more stability to the marketplace. These strategies are to increase premiums and limit the capacity of values insured. If insurance companies were not to implement these strategies, they would have little option other than to stop insuring residential realty all together.
The insurance markets are also taking stronger action on high-value condos with numerous units. Typically these properties have a higher likelihood for loss, and when one does occur, the value of the loss can be more substantial as more units may be affected. Condos continue to have the highest probability of loss, with losses affecting over 30%of the properties.
What Can Condo Corporations Do?
We recommend that condo corporations invest in effective loss prevention measures, respond to previous risk improvement recommendations, and establish a water damage mitigation plan. We’ve observed that many losses could have been eliminated or reduced by improved general maintenance. Typically, bylaws transfer ongoing maintenance responsibility to the unit owner, which leaves the condo corporation at risk. Proactive action by condo corporations has proven to reduce the likelihood and severity of losses. Many plumbing and heating companies are now providing loss prevention inspections and reports to condo corporations.
Reviewing coverage values, ensuring that deductibles are in line with bylaw requirements, and working with your broker to analyze your claims history to understand better how claims affect policy premiums is essential when building a loss prevention strategy.
With the help of our partners at Wawanesa Insurance, have compiled the following best practices and loss control suggestions for condo corporations to consider that may help manage increases and stabilize future rating.
Risk Prevention & Best Practices
Liability Risk Prevention
All handrails should be routinely checked to ensure they are secure and undamaged to reduce slip and fall incidents.
We recommend removing all snow promptly after a snowfall to reduce slip hazards. If ice develops, immediate response with melting products or physical removal is essential. If you contract out your snow removal, we always recommend obtaining proof of insurance from the contractor.
Slip and Trip
Routine walkarounds should occur within the building(s) and around the exterior grounds to identify any trip and slip hazards. Hazards could include but are not limited to heaved concrete, floor mats, extension cords, and downspouts.
Work Out Facilities
There should be rules and regulations posted within all fitness facilities that clearly states the safe and proper use of the equipment and clearly outlines cleaning expectations. These signs need to be clear and appropriately sized to be easily noticeable when entering and while using the facility.
General Risk Prevention
During the winter months, attention should be paid to the condo roofs. If there is buildup snow on the eaves of the roofs, ice dams could form behind them. When ice dams form, water may pool, increasing the likelihood of a roof leak. If this happens, we recommend having a contractor remove the snow and ice dams. A specialist should also be consulted for recommendations on reducing the risk of this occurring again in the future.
Any vegetation in contact with the building’s siding, eaves, eaves troughs, or roofing must be trimmed back annually. Proper vegetation maintenance is essential for avoiding physical damage to the building and ensuring that these systems can effectively drain water away from the property.
We urge management to engage with unit owners and occupants to encourage the safe use of BBQs by implementing some best practices or guidelines such as the following:
- Prohibit the storage of combustible items on balconies where a BBQ is being operated.
- Restrict the storage of propane cylinders to a maximum of only one 20lb cylinder, and make it a requirement to secure the cylinder to the BBQ.
- Prohibit the use of any solid fuel cooking appliance (those which produce sparks and hot ashes).
- Mandate that BBQs be used as far away as possible from combustible walls and patio furniture.
- Mandate that BBQs be attended at all times while in use.
Additionally, independent of BBQ use, we encourage management to prohibit the storage ofhighly combustible items and flammable liquids, such as automobile tires or gasoline, on balconies.
Extension Cord Use
Extension cords are a common cause of electrical fires. They are not designed or intended to be used as a substitute for permanent wiring applications and should only be used temporarily. If extension cords are being used permanently, these should be discontinued immediately and replaced with permanently installed hardwiring designed to meet the most recent edition of the Canadian Electrical Code. Attention should be paid to extension cords as they can also present a tripping hazard.
Fire Safety Practices
To ensure the fire sprinkler system is fully operational and within proper specs, we recommend having a qualified contractor test and inspect the entire system annually.
Annually servicing fire extinguishers through a certified contractor or company is an essential component of any ongoing preventative maintenance program.
Fire Monitoring System
To ensure that all fire alarms are functioning correctly and will be able to detect fires in the event of emergencies, we recommend having the system serviced and inspected on an annual basis by a qualified contractor or company.
Perform monthly testing of all emergency lighting to ensure they are operating correctly. We also recommend having a qualified electrician inspect and service the emergency lighting system annually.
Smoking Best Practices
Cigarettes are one of the leading causes of fires losses. If the condo corporation does allow smoking on condo grounds, we recommend putting as much distance between the building(s)and the designated smoking area as possible and installing proper metal cigarette butt disposal containers.
All flammable liquids should be stored in a designated area away from exits and ignitions sources. The storage area should be fire-rated, such as a metal flammable storage cabinet.
Gas Line Protection
If the gas meter or lines are located near an area with vehicular traffic, adequate protection is essential as this exposure could lead to an explosion or fire. We recommend that a concrete or steel bollard vehicle barrier be installed around the gas meter and lines to help reduce the risk of vehicle impact.
Plumbing, Electrical, HVAC and Ventilation Risk Prevention
Washing Machine Hoses
Flexible washing machine hoses pose a “weak link” within a building’s plumbing system. Being out of sight, they are one of the most neglected building maintenance items and give little warning prior to failure. If a hose does burst, up to 600-gal of water per hour, at 70-lbs of pressure, may be discharged. Losses from hose failures are both frequent and severe, resulting in large claims with policyholders absorbing their respective deductible.
These hoses should be inspected frequently and replaced as outlined below.
- Visually inspect all washing machine hoses and their connections for signs of deterioration, including but not limited to bulges, blisters, splits, corrosion, and leaks. Replace all hoses that show any signs of deterioration immediately.
- Physically check all hose connections for tightness and inspect the surrounding area for any signs of water and water damage.
- Replace all standard rubber and braided hoses that have been in service for five years if the manufacturer’s specifications are unknown, regardless of physical appearance and apparent condition. If the manufacturer’s specifications are known, please follow their replacement interval.
- When replacing hoses, consider upgrading to higher-end hose types such as stainless steel braided hoses or reinforced twin braided Floodchek Hoses (www.floodcheck.com).
To avoid having dryer vents clogging up with lint and increasing the risk of fire a qualified person or company should perform an annual cleaning of all dryer vents. Clogged dryer vents significantly reduce airflow which can cause a dryer to overheat and ignite lint that has collected in the dryer cabinet and ducts. This poses a severe fire hazard if left uncorrected. Plastic dryer vents have low melting points and are combustible. If present on any dryer these should be replaced with metal vents.
As a best practice, we recommend having all heating equipment inspected and serviced on an annual basis. This will ensure the equipment is performing as intended and will reduce the risk of equipment breakdown.
Hot Water Tanks
As hot water tanks near the end of their life expectancy, the likelihood of a catastrophic rupture increases substantially. Consideration should be given to establishing a formal hot water heater
inspection, monitoring and replacement program to prevent possible water damage to the building and contents.
A hot water heater inspection, monitoring and replacement program should include, at minimum, the following aspects:
- Establish, implement and enforce a hot water heater replacement frequency based on age (consider a maximum of 10 years).
- Replacing the anode rod annually will also help to prolong the life of the tank. Some pitting and surface corrosion is normal and to be expected, but if you see large chunks of metal coating missing from the surface it’s a good indication that the anode rod should be replaced.
- When hot water heaters need replacing, have the new ones installed on a catch pan directly plumbed to a floor drain.
- Inspect hot water heaters for signs of leaks regularly (at least monthly for heaters that are less than five years old and weekly for five years old or older).
- Ensure all people with access to the hot water heaters know where the water shut off is located.
If floor drains are not installed in laundry rooms and mechanical rooms special consideration should be given to installing them in these areas. If a washing machine or hot water heater fails a floor drain can significantly reduce the severity of the water loss.
Furnace, Boiler, and Mechanical Rooms
Do not store loose combustibles within 36 inches of gas-burning heating units, hot water tanks, and electrical panels.
When you work with us we ensure that you not only have the right insurance for your individual needs and risks, but you also get an entire team of risk experts who will assist you in properly protecting what matters most to you.
Call us at 306.757.1633 to connect with an advisor today!