Insurance for Strata Corporations and Insurance for Strata Owners and Renters
All strata corporations, regardless of size, must obtain property and liability insurance. Strata owners and renters should also purchase for their needs. Insurance for the strata corporation is not the same as strata homeowner or tenant insurance.
|Strata home owners and renters are strongly advised to purchase separate insurance to meet their needs.|
Learn more on this page:
Insurance for Strata Corporations
Insurance for Strata Lot Owners and Tenants
New Home Warranty Insurance
After An Insured Loss
For more complete information, readers should consult with an insurance broker who is knowledgeable about stratas.
The Strata Property Act requires that the strata corporation obtain and maintain property insurance and liability insurance. This means all kinds of strata corporations including bare land strata corporations and duplexes must obtain insurance.
The strata corporation’s property insurance is for common property, common assets, buildings shown on the strata plan and fixtures built or installed on a strata lot if built or installed by the owner developer as part of the original construction of the strata lot.
- Property insurance must be for full replacement value and insure against major perils as listed in the regulation: “the perils of fire, lightning, smoke, windstorm, hail, explosion, water escape, strikes, riots or civil commotion, impact by aircraft and vehicles, vandalism and malicious acts."
- Liability insurance must be for a minimum of $2 million. (However, many strata corporations choose to insure for a higher amount than the minimum $2 million).
Note: for many bare land strata developments, individual homes or townhouses are not shown on the strata plan and are typically not included in the strata corporation’s property insurance unless the strata corporation has taken responsibility by bylaw.
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.
Remember to discuss the cost of earthquake deductibles with your insurance broker as earthquake deductibles are typically shown as a percentage of the value of the property (which can range from 5% to 20% of the building value) - not the amount of the loss.
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. For more information about overland flooding insurance, talk to an insurance broker.
Appliances are typically not included in the strata corporation’s property insurance coverage. Fixtures are defined in the Strata Property Regulation 9.1 (1) as “items attached to a building, including floor and wall coverings and electrical and plumbing fixtures but does not include, if they can be removed without damage to the building, refrigerators, stoves, dishwashers, microwaves, washers, dryers or other items”. (However, some insurance policies issued to strata corporations will include removable heavy appliances or the strata corporation can choose to purchase insurance to cover these items).
Insurance for the strata corporation, full replacement value, deductibles and exclusions should be carefully discussed and reviewed each year with a knowledgeable insurance broker. The strata corporation may also want to purchase coverage, if available, for water damage, severe weather losses or other coverage.
The strata corporation must review the adequacy of the strata corporation’s insurance policy annually and report on the insurance coverage at each AGM (annual general meeting).
The strata corporation’s insurance is a common expense; it usually occurs annually and is part of the strata’s operating budget. Budgets are approved by majority vote at the AGM (annual general meeting).
It is helpful for strata corporations to explicitly let strata owners know what the insurance deductible is for the strata corporation. That way strata owners can purchase sufficient coverage for the strata corporation’s deductible. Insurance brokers and landlord associations also recommend that strata owners who rent their units to tenants have their tenants agree to purchase tenants’ insurance.
Note: sections are able to purchase some additional insurance as per section 194(4) of the Strata Property Act.
Stratas are also advised to check if they have relationships with airspace parcels as per this article from CHOA (The Condominium Home Owners Association of BC) and what insurance needs to be considered.
|Strata associations strongly recommend that strata owners and tenants purchase insurance to cover their needs. Strata fees only pay for the strata corporation’s insurance; strata fees do not pay for homeowner’s or tenant’s insurance.|
Every year the strata owner should discuss insurance for their strata lot, and exclusions, with an insurance broker. It is helpful for the strata owner to have a copy of the strata corporation’s insurance policy, or summary, with them in order to minimize or eliminate insurance gaps.
Bare land strata owners should also discuss “the bare land endorsement” for home owner packages so that adequate coverage is purchased.
Strata owners can purchase insurance for:
- personal property, e.g., household contents such as furniture, clothing, household goods, electronics, etc
- personal liability for any bodily injury or property damage unintentionally caused to others
- improvements (“betterments”) to the strata lot made by the current and previous owners, upt to a stated limit
- additional living expenses, over and above the normal costs of living, in the event of an insured loss
- additional coverage in case the strata corporation’s insurance coverage is inadequate
- fixtures installed by the owner-developer if, as per Strata Property Regulation 9.1 (1), these can be moved without damaging the building such as fridges, ovens, microwaves and other items
- losses to common property or other owners’ units for which the strata owner is deemed responsible
A strata owner may be required to pay the strata corporation’s insurance deductible. This could be a significant expenses as deductibles of $25,000 are common and can range up to $100,000 or more.
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. Recent court cases have determined that responsibility for an insurance claim does not mean that the strata owner must be negligent, careless or legally liable (i.e. at fault) in order to be responsible for paying the corporation’s deductible.
For example, a dishwasher overflows in a strata and causes water damage to common property. The strata corporation can sue the strata owner for the cost of the strata corporation’s insurance deductible even if the strata owner was not “at fault”.
It is advisable that strata owners review the strata corporation’s insurance policies and discuss with their insurance broker the strata corporation’s deductible amounts. That way the strata owner can purchase sufficient coverage for the strata corporation’s deductibles or for the cost of the loss if it less than the strata corporation’s deductible.
The strata owner is also advised to discuss other insurance coverage needs such as for a home-based business, water damage, major upgrades done to the unit or if the unit is to be occupied by a tenant or left vacant for periods of time. Insurance brokers and landlord associations also recommend that strata owners who rent their units to tenants have their tenants agree to purchase tenants’ insurance.
Strata owners should consider purchasing earthquake coverage for their units. Remember to discuss the cost of the deductible for both owner's earthquake insurance and the strata corporation's earthquake insurance with an insurance broker.
Insurance For Strata Tenants (Renters)
The strata corporation’s insurance and the landlord’s insurance will not cover tenants (renters). Tenants are responsible for damage they may cause to any part of the building or common property in which they or others live. Losses suffered by, or incurred by, tenants or their visitors are not covered by the insurance policies of the strata corporation or the landlord.
Tenants (renters) are advised to purchase insurance to cover their needs. Tenant insurance can be purchased for:
- personal property, e.g., household contents such as furniture, clothing, household goods, electronics, etc.
- additional living expenses over and above the normal cost of living in the event of an insured loss
Insurance for the tenant (renter), and exclusions, should be carefully discussed and reviewed each year with a knowledgeable insurance broker. Coverage may also be purchased for: a home-based business, water damage and earthquake (remember to discuss the cost of the earthquake deductible with the insurance broker).
Usually new (and newer) strata developments in B.C. have home warranty insurance.
Homes built by Licensed Residential Builders are covered by mandatory, third-party home warranty insurance. As a minimum, this coverage includes 2 years on labour and materials (some limits apply), 5 years on the building envelope and 10 years on structure. The warranty is attached to the home, not to the owner of the home, and remains in effect upon the re-sale of the home until the coverage expires.
Strata-titled homes have two policies of home warranty insurance, one on the home and another on the common property. When the coverage of a new strata-titled home commences, it is possible that the coverage on the related common property has already started or even ended as coverage on the common property of strata-titled buildings starts when the first unit in the building is occupied or sold.
- Learn more about B.C.'s new home warranty insurance at BC Housing's Licensing and Consumer Services (formerly the Homeowner Protection Office).
The strata corporation should be aware of other insurance requirements. For example, the strata corporation may work with outside contractors such as strata property managers, landscapers and security personnel. Strata corporations must ensure that WorkSafeBC requirements are met for workers employed or contracted by the strata corporation.
CHOA advises in a 2011 strata insurance bulletin that “the Strata Corporation should ensure that insurance requirements are spelled out in any contracts” and get copies.
The CHOA 2011 bulletin further advises that “anyone handling strata corporation funds should be covered by fidelity bonding or insurance as claims for misappropriation of funds are typically excluded from the strata corporation’s property and liability policies".
Strata associations also recommend that strata corporations and sections purchase Directors and Officers Liability Insurance (often called D&O insurance) for their strata council and any staff such as a strata property manager. This 2011 CHOA insurance bulletin provides additional information on D&O insurance. Strata corporations and sections should also discuss insurance coverage with an insurance broker who is knowledgeable about strata properties.
After a loss or a change in insured property and assets it is very important for the strata corporation, strata owner or tenant to immediately contact the insurance broker. Insurance providers may also have other requirements for insurance holders.
Some other things to note:
- Insurance money must be used without delay to repair or replace the damaged property unless the strata corporation has a 3/4 vote within 60 days to decide not to replace or repair damaged property after receiving insurance proceeds paid on a claim in respect of the damaged property. The insurance proceeds are then allocated among “persons with an interest”. Note: section 160 of the Strata Property Act allows parties to go to court to dispute the 3/4 vote.
- The strata corporation can pay for a strata corporation’s insurance deductible from the CRF (without requiring a vote of approval by owners) or by special levy (without requiring a vote of approval by owners). This allows the strata corporation to quickly obtain insurance payouts to repair and replace common property and other assets.
- A strata corporation can sue an owner to recover the strata corporation’s insurance deductible, if the owner is responsible for the loss or damage that gave rise to the claim.
Strata Property Act Sections: 149-162, 194 (4)
Strata Property Act Regulations: 9.1-9.2
The information on this website about strata housing is provided for the user’s convenience as a basic starting point; it is not a substitute for getting legal advice. Learn more about the site’s purpose and limits. The content on this website is periodically reviewed and updated by the Province of British Columbia as per the date noted on each page: December 20, 2016.