The province is set to increase rates on residential property insurance to cover the costs of a $7 billion price tag to help pay for the cost of rebuilding BC’s crumbling roads and bridges.
But the hike could be the death knell for BC’s ability to borrow.
The government expects the increase to save BC $20 million a year, a figure that would increase by about a third as BC’s population grows and as the province tries to plug its massive deficit.
BC has the highest per capita insured rates in Canada, at $10,700 per year, followed by Alberta ($7,100), Manitoba ($6,900), Quebec ($6-7,000) and Saskatchewan ($5,000).
BC’s overall insured rate is the highest in the country, at 29.4%.
The BC government’s latest estimate suggests the average homeowner in BC could save $15,000 per year by having an additional $1,000 of property insurance coverage, up from $10-1,200 currently.
BC has a relatively small uninsured population, at 6.5 per cent of the population, meaning it can borrow money cheaply.
“We have a huge problem with BC’s uninsured rate,” said Paul Prentice, a vice president at BC Mortgage Corp., which provides mortgage insurance to the province.
“We’re going to be saving $20m by adding a bit more coverage to BC’s rates, which will be a very big help.”
With the number of uninsured people in BC set to grow, the government has proposed a $50,000 increase in BC’s provincial minimum wage to pay for this cost increase.
The average price tag for the new premiums would rise from $7,600 to $7.3 million per year.
The cost of the province’s roads and infrastructure projects would increase from $8.5 billion to $8 billion, according to the BC Infrastructure BC, a government-funded research group.
The province’s debt burden would rise to about $50 billion from $33 billion, or about 5.5% of GDP.
This story has been updated to include comments from the BC government.