FAQ Strata - BC
The Strata Property Act requires the strata corporation to acquire and maintain property insurance and liability insurance.
Property insurance required for strata corporation:
According to section 149 (1) of the Strata Property Act, a strata corporation must obtain and maintain property insurance on the common property, common assets, buildings shown on the strata plan, and fixtures built or installed on a strata lot, if the fixtures are built or installed by the owner developer as part of the original construction on the strata lot. The property insurance must be on the basis of full replacement value, and insure against major perils, as set out in the regulations, and any other perils specified in the bylaws. “Major perils” are defined as follows: 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 is the full amount that an entity would have to pay to repair or replace an asset at the present time. Should the strata corporation’s insurance limit not be sufficient to meet the costs to repair or replace damaged property, the strata corporation and owners will be required to pay for any short fall.
Commercial General Liability required for strata corporation:
According to section 150 (1) of the Strata Property Act, a strata corporation must obtain and maintain liability insurance to insure the strata corporation against liability for property damage and bodily injury. A strata corporation must have at least $2 million in liability insurance coverage.
Here is a list of insurance coverages we recommend you obtain for your strata corporation.
Here are 4 reasons for you to obtain insurance for your unit:
- Contents Insurance
Strata property insurance does not cover improvements and personal property such as furniture and electrical appliances. The insurance that the strata corporation organizes basically covers the structure of the building and any fixtures inside lots such as sinks, baths and plumbing.
- Unit Additional Protection
If there is a loss to the property in amounts in excess of amounts insured by the strata corporation, the shortfall will be passed onto the unit owners in the form of a special levy.
- Liability Insurance
An owner will not be defended by the strata corporation’s liability insurer against claims for property damage and/or bodily injury, even if the claim arises from an injury suffered on the common property.
- Deductible Assessment Insurance
It is always recommended that owners obtain a policy which includes deductible assessment coverage for at least the amount of the strata corporation’s deductible. Under section 158 (2) of the Act, the strata corporation may sue an owner to recover the deductible if the owner is deemed to have been responsible for the claim. Many strata corporations have also adopted bylaws allowing the strata to bill the cost of the deductible back to the responsible strata lot without having to sue.
The vast majority of strata corporations in BC rely upon independent insurance brokers to arrange their insurance. The role of an insurance broker is often misunderstood. An insurance broker is an independent agent who represents the buyer, rather than the insurance company, and tries to find the buyer the best policy by comparison shopping. The insurance broker’s job is to:
- Negotiate with the insurer(s) on your behalf finding the best price, often searching many insurance markets.
- Identify your insurance needs and ensure your strata corporation has adequate coverage.
- Advocate on your behalf any claim dispute you may have with the insurer.
- Promptly answer any insurance related questions you may have.
- Provide you with all documentation legally required.
- Ensure the strata corporation’s insurance policy is in compliance with all provincial and Canadian insurance statutes.
An insurance premium is the amount of money charged by an insurance company for active coverage.
Premiums for a strata corporation are determined by insurance companies through a variety of factors such as:
- Age of the building
- Construction details
- Fire detection and suppression systems
- Amount of the deductible
- Security features
- Claims history
- Replacement cost value
- Latest appraisal and more
A deductible is a sum of money a strata corporation pays before an insurer will provide the benefits outlined in an insurance policy.
The purpose of a deductible is to keep the cost of insurance lower and to prevent strata corporations from making claims when the cost of loss is small. When a strata corporation needs to make a claim, it must first incur the deductible in full; the insurer then steps in to cover the balance of the insured costs, up to the limits outlined in the policy. Section 158(1) of the Strata Property Act provides that payment of a deductible is treated as a common expense of all owners. A strata corporation must pay a deductible by way of funds raised by special levy or taken from the contingency reserve fund. Under section 158 (2) of the Strata Property Act the strata corporation is permitted to sue a responsible owner to recover any deductible paid by the corporation. Some strata corporations have adopted a bylaw requiring a responsible owner to pay the deductible without the need for a court order. A higher deductible may lower the cost of insurance; however, if the there are enough claims below the deductible limit, a strata corporation may pay exponentially more in repair costs than it would by lowering a deductible and accepting a higher cost of insurance. An experienced insurance broker can help a strata corporation determine a reasonable deductible.
The insured or property manager should secure as much information as is available: such as loss date & location, identity & coordinates of all parties involved, cause, nature & extent of damages, police case number, etc.
Emergency work should be initiated as soon as possible to mitigate loss, control damages and minimize impact on owner(s) and residents. Qualified and approved contractors only should be called in to ensure quality and service standards are met and costs are justified.
The claim should be reported as soon as possible directly to the BFL CANADA Claims Department by telephone in case of emergencies and/or facsimile or e-mail in other cases. Use of the “Insurance Claim Report” form, including management company reference number, form is recommended.
BFL CANADA Claims Department should be notified when initial contact by an adjuster is not made in a timely manner after a claim is reported (IE: within 24 hours).
All repair specifications, estimates and/or quotes should be forwarded to BFLCANADA Claims Department for records purposes and immediate delivery to the appropriate adjuster.
Invoices for repairs are not usually paid by The Owners, except for specific invoices in the amount of the applicable policy deductible. All other invoices should be forwarded to BFL CANADA Claims Department for records purposes, immediate delivery to the adjuster and direct payment to the contractor or trade.
All incidents should be recorded with all available information such as time and date of incident, exact location, identity & coordinates of all parties involved, nature and extent of damages if known, etc. Incidents should be reported to BFL CANADA Claims Department as soon as possible.
Any development, activity and/or documents related to an incident should be reported or dispatched as soon as possible to BFL CANADA Claims Department.