Strata owners each own a share in
properties that may be valued in the
millions of dollars and which, in many
respects, operate as commercial buildings. The Strata Property Act provides
for a democratic system of governance
and standards for repairs, maintenance
and operations that helps ensure the
rights of owners and their responsibilities to manage their asset well.
The act requires that all strata corporations obtain and maintain property
insurance and liability insurance for the
common property. This requirement includes bare land stratas and duplexes.
The act stipulates what perils the policy
must cover and the level of coverage.
The strata corporation must review the
adequacy of the strata corporation’s
insurance policy annually and report to
owners on the insurance coverage at
each annual general meeting (AGM).
MORE;THAN;A;MILLION British Columbians live in strata properties. In some
urban communities, most of the residents are in strata buildings. It follows, therefore, that the prosperity of everyone in the community depends to a large degree on
the understanding they and their neighbours have of their responsibility in managing
their shared property — and of being resilient in the event of an emergency.
• The insurance policy that’s arranged by the strata corporation to covers the building
and common areas does not provide coverage for your furniture and other personal
belongings. You need a unit policy, which covers your belongings, any upgrades that
have been made to the unit since original construction.
• Your unit policy can provide coverage for losses to common property or other owners’
units for which the strata owner is deemed responsible. And it can provide additional
coverage in case the strata corporation’s insurance coverage is inadequate.
• Strata owners of units that they rent to others should have a landlord’s policy and
should have their tenants agree to purchase tenants’ insurance.
(which can range from 5% to 20% of
the building value) — not the amount of
the loss. This is useful information for
owners in two important regards:
1) Strata owners can purchase
sufficient unit insurance to cover
the amount of the strata corporation’s deductible in the event
that a loss originates in their unit
and extends to common area or
2) Strata owners can make long-range plans for paying the building insurance deductible in the
event of an earthquake.
?Why do strata owners need a separate insurance policy for their unit? • A unit policy provides several important coverages that are not in the building policy: it covers your contents, upgrades made to the unit since construction, living-out expenses in the event a loss requires you to vacate during repairs, and third-party liability. • Perhaps most important, how- ever, your unit policy provides coverages for losses to your unit, neighbouring units or common areas for which you would be held
responsible. If a leak or fire starts
in your unit and the damage
extends to neighbouring units or
common property, you may be
held responsible for the cost or
repairs. Your unit policy would pay
the strata corporation’s insurance
deductible (certain restrictions
may apply). This could be a significant expense as deductibles
of $25,000 are common and can
range up to $100,000 or more.
Most strata corporations fulfill this
requirement to report to owners by
including the insurance declaration for
the building policy in the AGM package.
Owners should take note of the level
of deductible for each peril coverage,
noting specifically that the earthquake
deductible is typically shown as a
percentage of the value of the property