Strata living is standard in British Columbia (BC), with nearly 1.5 million people living in condominiums. This form of housing includes not only apartment-style condos but also duplexes, townhouses, fractional vacation properties, and even bare land strata (single-family homes on strata lots).
Collectively, the owners of the strata lots in the strata plan are members of the strata corporation, and they generally elect councils to manage the operations of the building. One of the strata council’s primary responsibilities is to ensure the strata is protected by adequate insurance.
The Strata Property Act of BC
The Strata Property Act of BC (SPA) outlines the insurance requirements for each strata corporation.
For all strata properties, except for bare land strata, the SPA mandates the strata corporation to maintain comprehensive property insurance. This insurance must cover the common property, common assets, buildings shown on the strata plan, and original fixtures and fittings in each strata lot up to their full replacement value. Additionally, the insurance must provide protection against a range of major perils including fire, lightning, smoke, windstorm, hail, explosion, water escape, strikes, riots or civil commotion, impact by aircraft and vehicles, vandalism, and malicious acts.
Furthermore, the SPA requires the strata to carry a minimum of $2 million liability insurance. This insurance safeguards the strata corporation against potential lawsuits arising from bodily injury or property damage that may occur on the strata property.
Optional Strata Corporation Insurance
Most strata corporations opt for broader coverage beyond the major perils. This is typically achieved through a comprehensive “broad form” insurance policy that protects against sudden and accidental losses unless specifically excluded. Additionally, coverage is extended to include equipment breakdown, sewer backup, flood, and earthquake risks.
Any strata corporation should secure a broad insurance policy encompassing these additional perils. Given evolving risks, the minimum required liability limit of $2 million may no longer be adequate. At Waypoint, we strongly recommend considering an increased limit, such as $5 million, $10 million, or even more, tailored to your specific exposure.
Furthermore, it is prudent for strata corporations to obtain directors & officers insurance to safeguard council members against potential claims arising from their management decisions within the strata corporation.
Condo Unit Owners Insurance
It is important to note that the strata corporation policy does not insure the condo unit owner’s personal belongings or any improvements or betterments made to the unit, nor does it insure a unit owner’s additional living expenses or loss of rental income arising from an insured peril.
These exposures would need to be insured under a separate strata unit owner’s policy including other important coverages such as personal liability, contingent coverage, and unit assessments.
Suppose you are purchasing a strata insurance policy for the first time. In that case, your insurance broker will need to know where your strata is located, how many units it has, and descriptions of the common property elements. They will then ask you for property details like construction type, age of the building, and any recent renovations or upgrades as well as for information on any risk factors such as proximity to bodies of water, past claims history, and other unique circumstances.
When meeting with your insurance broker, bring a copy of the strata corporation’s bylaws and, if you have an existing policy through another broker, an Insurance Information Certificate. If you have a large strata, your broker may also ask you to provide an insurance appraisal from an accredited insurance appraiser detailing the property’s value and contents to be insured.
Several years ago, there was some disruption to the strata insurance market in terms of ability to insure to capacity for strata buildings and substantially increased rates. At Waypoint, we’ve seen rates for policies in the property insurance category stabilize, although the effect of inflation on the cost of repairs and increasing incidence of catastrophic losses continue to be a problem.
The best thing you can do as a strata corporation that is insuring a strata building or subdivision is to work with a broker like Waypoint that has a far reach, the ability to fill your line, and the capacity to insure your building(s) to 100% of replacement cost. If you’re ready to purchase, renew, or review your strata insurance policy, give us a call or book an appointment today!