Insurance for strata corporations

All strata corporations, regardless of type or size, must obtain property and liability insurance as required by the Strata Property Act. This includes, for example, strata-titled duplexes, bare land strata developments ("strata subdivisions") with single family homes or townhouses, leasehold strata corporations and mid-rise or high-rise condos.  

Learn more on this page

• Mandatory insurance for strata corporations: property, specified perils, full replacement value, liability
• Optional insurance: earthquake, overland flooding, household appliances, directors and officers liability, volunteer accident insurance
• After a loss
• Annually reviewing strata corporation insurance
• Informing owners, tenants and prospective purchasers  
• Paying for strata corporation insurance
• Home warranty insurance for new homes
• Other insurance: WorkSafeBC, fidelity bonding

For more complete information, strata council members and owners should consult with an insurance broker who is knowledgeable about insurance for strata corporations.

Mandatory insurance for strata corporations

The Strata Property Act requires that all strata corporations obtain and maintain property insurance and liability insurance for the strata corporation.

This means all kinds of strata corporations must obtain insurance including, for example, bare land strata corporations with single family homes or townhouses, (strata "subdivisions") and strata-titled duplexes as well as condo mid-rises and high rises.

Individual home owner insurance does not cover the strata corporation.

Strata corporation property insurance

Strata corporation property insurance is not the same as insurance for single family homes. Strata corporation insurance doesn't cover the personal content of strata homes. And homeowner insurance doesn't provide coverage for a strata corporation, including strata-titled duplexes. 

The strata corporation's insurance is for common property, common assets, buildings show on the strata plan, and fixtures installed on a strata lot if built or installed by the owner developer as part of the original construction of the strata lot.

Some additional information to consider for some strata corporations: 

• Bare land strata corporations: for bare land strata developments, the individual homes are usually not show on the strata plan and are not included in the strata corporation's property insurance, unless the strata corporations has taken responsibility for all or parts of strata lots, including buildings not shown on the strata plan. However, common property such as a strata corporation clubhouse or sanitation and water must be insured.
• Sections in strata corporations, are able to purchase some additional insurance as per section 194(4) of the Strata Property Act. 
• Airspace parcels: strata corporations should check to see if they have relationships with airspace parcels and how that may impact the strata corporation's insurance needs. The requirements for insurance of joint or shared components between the airspace parcel and the strata corporation are set out in an Airspace Parcel Agreement.
  • Airspace parcel agreements are complex documents. Strata corporations are advised to consult with a strata lawyer to understand the airspace parcel agreement.
  • CHOA (the Condominium Home Owners Association of BC) provides an overview of airspace parcels in this guide: https://www.choa.bc.ca/wp-content/uploads/pdf/600/600-005-Understanding-ASP-agreements-May-20-2015.pdf

Specified perils

The strata corporation's property insurance must insure against major perils as listed in the Strata Property regulation.

These perils are: “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." 

Full replacement value

The strata corporation’s property insurance must be for full replacement value. 

It is important to keep property appraisals of the strata corporation up to date so that strata corporations are not under-insured. Insurers will ask for a copy of a recent replacement cost appraisal done within the past two or three years to determine the full replacement value.

In the event of a catastrophic loss, insurance for full replacement value ensures that owners get sufficient funds to rebuild. 

Liability insurance

Liability insurance must be for a minimum of $2 million for the strata corporation. However, many strata corporations choose to insure for much higher amounts. Strata corporations should consult with their insurance broker to review liability insurance and consider the complexity of the property, the number of strata lots, and amenities.

Optional insurance  

Earthquake insurance  

Strata corporations are not required to obtain earthquake insurance as earthquake is not a peril that is listed in the regulation. However, strata corporations in earthquake-prone areas of British Columbia are strongly advised to purchase earthquake insurance.

It is important to discuss the cost of earthquake deductibles with the strata insurance broker. (A deductible is the amount of money that the insured party is responsible for paying towards the insured loss before the insurance company pays).

• While the deductibles on other coverage listed in the policy are set amounts (for example, $50,000); this does not apply to earthquake insurance.
• Earthquake insurance deductibles are much higher. They are typically shown as a percentage of the value of the property, which can range from 10% to 20% of the building’s full replacement value - not the amount of the loss.  
• A calculation table showing each unit’s share of an earthquake deductible may be included with the notice of the annual general meeting and insurance updates.

Overland flooding 

Overland flood damage is not listed in the regulation and is not required as mandatory strata corporation property insurance.

Overland flood damage occurs when water outside the building flows and seeps into buildings through windows, doors, and cracks. For example, overland flooding can occur after heavy rainfalls or when rivers overflow.

With the increased frequency of weather-related events in B.C. more strata corporations are purchasing overland flooding coverage to add on to the strata corporation’s property insurance policy. For more information about overland flood insurance, talk to an insurance broker.

Household appliances 

Household appliances within strata units 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.

Homeowners should consider purchasing insurance to meet their personal needs including appliances not covered by the strata corporation’s policy. Learn more in strata homeowner and tenant insurance.

Directors and officers liability insurance  

Directors and Officers Liability Insurance (often called D&O insurance) is to cover unintended errors or omissions that may occur as the strata council or manager performs their duties or in the provision of certificates, records, and documents.

Strata corporations are not required to obtain D&O insurance; however, strata homeowner associations recommend  it to help protect council members and staff, such as a strata property manager, from personal financial liability.

The strata corporation should confirm with the insurance broker on the terms, conditions, and events covered under this type of policy.

This CHOA insurance bulletin provides some additional information on D&O insurance and possible exclusions: https://www.choa.bc.ca/wp-content/uploads/600-004-Insurance-Sept-2014.pdf

Volunteer accident insurance  

Strata corporations may have volunteers who do some work for the strata corporation such as maintenance, yard work, or recycling. For volunteer work that could result in an injury, strata corporations should consider obtaining volunteer accident insurance.

This type of insurance generally provides compensation for dismemberment and death and a small amount for wage replacement for volunteers who miss work due to an injury while doing volunteer work for the strata. For more information about volunteer accident insurance, talk to an insurance broker.

After a loss  

After a loss or a change to the strata corporation’s insured property and assets, for example if an asset is bought or sold, the strata council or strata property managers should immediately contact the insurance broker.

In the event of a loss, if one or more strata lots is involved, those owners and tenants should also contact their respective insurance brokers.

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 or in the event of a total loss. The insurance proceeds are then allocated among “persons with an interest.” Strata corporations should seek legal advice prior to holding the meeting in order have a good understanding of the implications. 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, the contingency reserve fund (without requiring the usual 3/4 vote of approval by owners) or by special levy (without requiring the usual 3/4 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 recover the strata corporation’s insurance deductible from an owner, if the owner is responsible for the loss or damage that gave rise to the claim. The owner does not have to be deemed negligent in order to be held responsible.

Annually reviewing the strata corporation's insurance  

The required annual insurance for the strata corporation for full replacement value, deductibles, and exclusions (i.e. what the insurance policy doesn’t cover) should be carefully discussed and reviewed each year with a knowledgeable strata insurance broker.

The strata corporation may also want to purchase additional optional insurance as discussed above.

Strata councils should also be aware that:

• Insurers or insurance agents must provide 30-days advance notice directly to the strata corporation of their intention to not renew an insurance policy or of any material changes to the strata insurance policy. This ensures strata corporations have advance warning if there are cost increases, increased deductibles, or additional exclusions and will have time to seek other insurance options if desired.
• Referral fees from insurance companies to strata property managers from strata insurance transactions are not allowed.
• Insurance agents are required to disclose their commission amount, or a reasonable estimate, to strata corporations. 

Informing owners, tenants or potential purchasers  

Annual general meeting disclosure

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). It is helpful for strata corporations to include the summary of the most recent strata insurance policy with the AGM meeting notice.

Form B disclosure  

The insurance summary must be included in the Form B: Information Certificate if the Form B is requested by owners or potential purchasers.

Notifying strata owners and tenants of insurance changes  

Any material changes to the strata corporation’s insurance policy must be communicated to strata owners and tenants as soon as feasible. For example, these changes could be a loss or reduction of coverage or a change to the strata corporation’s insurance deductible. 

Strata owners and tenants need to be informed about strata corporation insurance changes so they can protect themselves and purchase sufficient insurance to meet their needs.

• Strata owner and tenant insurance can include coverage to pay for the strata corporation’s insurance deductible if the owner or tenant is found responsible for an insurable incident.
• Deductibles for a strata corporation insurance policy can range from $100,000 to $750,000 and higher depending on the number of units and the strata corporation’s claims history.

Paying for strata corporation insurance  

The strata corporation’s insurance is a common expense; it usually occurs annually and is part of the strata’s operating budget. Annual budgets for the strata corporation are approved by majority vote at the AGM (annual general meeting).

For unanticipated expenditures, such as a higher than expected insurance policy that cannot be put forward in a timely way for approval in the budget or at a general meeting before being paid, spending from the operating fund or the contingency reserve fund may be possible without a vote of the strata corporation.

• This type of expenditure is permissible if there are reasonable grounds to believe an immediate expenditure is necessary to ensure safety or prevent significant loss or damage ([Strata Property Act sec. 98(3)].)
• Insurance is not only a statutory requirement but is also intended by definition to prevent the strata corporation from suffering a significant loss. ([Strata Property Act sec. 98(3.1)].)
• The strata council may wish to consult with a strata lawyer to decide what “reasonable grounds” are.
• This decision can be made by the strata council; a vote by the owners at an AGM or SGM (special general meeting) is not required.
• The strata council may only spend the minimum amount necessary to ensure that the strata corporation’s insurance premium is paid.

Depreciation reports 

All strata corporations in B.C. with five or more strata lots must obtain a depreciation report every five years. New strata corporations are required to get depreciation reports within 2 years if established between July 1, 2024 and June 30, 2027 and within 18 months if established on or after July 1, 2027.

Depreciation reports are valuable tools in helping owners make long-term funding decisions to pay for maintenance, repair, and renewal. Timely repair, maintenance, and renewal help to prevent losses and keep insurance deductibles as low as possible. Learn more about depreciation reports: https://www2.gov.bc.ca/gov/content/housing-tenancy/strata-housing/operating-a-strata/repairs-and-maintenance/depreciation-reports/depreciation-report-requirements

Home warranty insurance for new homes 

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. At 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 home warranty insurance for new homes at BC Housing's Licensing and Consumer Services (formerly the Homeowner Protection Office)

Other insurance 

The strata corporation should be aware of other insurance requirements and coverage. CHOA (the Condominium Home Owners Association) discusses some of these in a strata insurance bulletin: https://www.choa.bc.ca/wp-content/uploads/600-004-Insurance-Sept-2014.pdf

WorkSafeBC requirements 

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 the strata insurance bulletin referenced above that “the strata corporation should ensure that insurance requirements are spelled out in any contracts” and should retain copies.

Fidelity bonding and strata management coverage 

CHOA’s strata insurance bulletin also 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."

Cyber fraud is happening more often as more financial transactions are being conducted electronically by both strata corporations and strata management companies.

Under the law of agency, strata management services are usually included as a “named insured” on strata corporation policies. To protect the actions and services of the strata managers and brokerages, as agents of the strata corporation, the strata management agency is typically included as named insureds on the strata corporation policy.

References:
Strata Property Act Sections: 149-162, 194 (4)
Strata Property Act Regulations:  9.1-9.2

Find it fast: a convenient site map listing all the pages on the Province's strata housing website.

Subscribe for updates: users can subscribe for occasional email updates identifying changes to strata legislation and the Province's strata housing website.

Disclaimer: 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 at the top of each page.