Strata Tip of the Week - What is the Strata Corporation Required to Insure?

All strata corporations in BC, regardless of size, must obtain property and liability insurance, including bare land strata corporations and strata-titled duplexes.

1. Property Insurance

A. The strata corporation’s property insurance must be 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 (e.g., the original flooring, cabinets, etc.)

B. Property insurance must be for the full replacement value (which requires a current appraisal) and insure against all major perils, which include:

• fire, lightning, smoke, windstorm, hail

• explosions

• water escapes

• strikes, riots or civil commotion

• impact by aircraft and vehicles

• vandalism and malicious acts

One surprising fact is that, as per the Strata Property Regulation, earthquake insurance is not considered a major peril. However, purchasing a unit in a strata corporation that does not have earthquake insurance can pose significant risks. If that is the case, it is important that you make your clients aware, and advise them to seek professional insurance advice.

2. Liability Insurance

The strata corporation must also obtain and maintain liability insurance to insure the strata corporation against liability for property damage and bodily injury, for a minimum amount of $2,000,000.

3. Strata Homeowner Insurance

It’s important to realize that strata corporation insurance is not the same as strata homeowner insurance. In order to mitigate their risks, many strata owners in BC obtain additional homeowner insurance, which often insures them for:

• Their household contents

• Upgrades made to the unit

• Strata deductible coverage (which protects them in case they are found responsible for paying one of the strata’s deductibles.

It is always a good idea to recommend to your clients that they take a copy of the strata’s insurance policy to their insurance broker, to have a discussion about their ability to get additional homeowner insurance, as well as the costs associated with this. That way they’ll know whether they can get additional homeowner insurance that fits their needs, and the costs associated with this.

That’s it for this week. If you have any suggestions for other topics you’d like us to cover, please let us know at info@condoclear.ca.