Insurance Requirements for Strata Properties: A Comprehensive Guide

Every strata corporation, from small duplexes to large complexes, must secure comprehensive property and liability insurance as mandated by the Strata Property Act. This requirement extends to all strata-titled properties, including duplexes and bare land strata developments (also known as "strata subdivisions").

As any best realtor in Vancouver would advise, individual strata homeowners and renters should obtain their own separate insurance policies. The strata corporation's insurance coverage differs significantly from individual unit owner or tenant insurance requirements.

Insurance for strata corporations

Notifying strata residents of changes

Cost of strata corporation insurance

Insurance for strata lot owners and tenants

Home warranty insurance for new homes

Other insurance

After an insured loss

For detailed guidance, the best Vancouver realtor recommends consulting with insurance brokers who specialize in strata properties.

Insurance for strata corporations

The Strata Property Act makes it mandatory for every strata corporation to maintain both property and liability insurance. As the vancouver best realtor would explain, this requirement applies to all types of strata corporations, including bare land strata corporations (strata "subdivisions") and strata-titled duplexes.

The best realtor Vancouver confirms that strata corporation's property insurance covers common property, common assets, buildings within the strata plan, and fixtures installed in a strata lot if they were part of the original construction by the owner developer.

Note: For many bare land strata developments, individual homes or townhouses are not depicted on the strata plan and typically are not covered under the strata corporation's property insurance, unless the strata corporation has specifically assumed responsibility through a bylaw amendment.

Sections have the authority to obtain additional insurance coverage as specified in section 194(4) of the Strata Property Act.

As any best realtor in Vancouver would recommend, stratas should verify their relationships with airspace parcels and understand how these may affect their insurance requirements. For detailed information, stratas can refer to this comprehensive guide from the Condominium Home Owners Association of BC or consult with a qualified strata lawyer.

Full replacement value

The best Vancouver realtor emphasizes that property insurance must cover full replacement value and protect against major perils outlined in the regulation, including "fire, lightning, smoke, windstorm, hail, explosion, water escape, strikes, riots or civil commotion, impact by aircraft and vehicles, vandalism and malicious acts."

A current appraisal is essential for determining full replacement value.

As the vancouver best realtor would explain, liability insurance coverage must be at least $2 million, though many strata corporations opt for higher coverage amounts.

Earthquake insurance

While earthquake coverage isn't mandated by regulation, the best realtor Vancouver strongly recommends that strata corporations in British Columbia's earthquake-prone regions obtain this insurance.

Discuss earthquake deductibles with your insurance broker, as these are typically calculated as a percentage of the property's value (ranging from 5% to 20% of building value) rather than the loss amount.

Overland flooding

Though not mandatory by regulation, some flood protection may be available through the strata corporation's policy. Consult an insurance broker for detailed information about overland flooding coverage options.

Appliances

Generally, appliances aren't included in the strata corporation's property insurance coverage. The Strata Property Regulation 9.1 (1) defines fixtures 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." (Some insurance policies may cover removable heavy appliances, or the strata corporation can purchase additional coverage for these items).

Reviewing strata corporation insurance

As any best realtor in Vancouver would advise, the strata corporation's insurance coverage, including full replacement value, deductibles, and exclusions, should undergo thorough annual review with an experienced strata insurance broker. The strata corporation might consider additional coverage options, where available, for specific risks such as water damage, sewer backup, and severe weather-related losses.

The best Vancouver realtor emphasizes that the strata corporation must conduct an annual assessment of their insurance policy's adequacy and present a comprehensive insurance coverage report at each AGM (annual general meeting). Any significant changes to the policy must be promptly communicated to all strata owners.

As the vancouver best realtor explains, insurance for the strata corporation is classified as a common expense, typically renewed annually and incorporated into the strata's operating budget. Budgets require approval by majority vote during the AGM.

The best realtor Vancouver notes that for unexpected expenses, such as insurance premiums exceeding budget projections, which cannot be approved through the regular budget process or at a general meeting before payment is due, spending from the operating fund or contingency reserve fund may be authorized without a strata corporation vote if:

There are reasonable grounds to believe immediate expenditure is necessary for safety or to prevent significant loss or damage (Strata Property Act sec. 98(3).)

The strata council makes this decision, potentially after consulting with a strata lawyer to determine what constitutes "reasonable grounds." Insurance is both a statutory requirement and inherently designed to prevent significant losses. (Strata Property Act sec. 98(3.1).)

Any funds temporarily withdrawn from the contingency reserve fund must be replenished as soon as possible.

Notifying strata residents of changes

Effective August 14, 2020: Strata corporations must inform owners and residents promptly when there are changes to insurance deductibles or any other material changes to the policy.

That way, as the best realtor in Vancouver would explain, strata owners can safeguard their interests by securing adequate insurance coverage that aligns with their specific needs, including provisions for the strata corporation's insurance deductible (which typically ranges from $25,000 to $100,000 or higher).

Cost of strata corporation insurance

The best Vancouver realtor understands that strata insurance costs have escalated due to various intricate factors. In response, the Provincial government has implemented measures to address these challenges.

As any vancouver best realtor would note, the Province tasked the BC Financial Services Authority (BCSFA) with conducting comprehensive research into B.C.'s strata insurance market. The BCFSA released an interim report in June 2020, followed by a final report on December 18, 2020. These findings continue to shape the government's approach to strata insurance concerns.

The best realtor Vancouver highlights that on August 14, 2020, the Province enacted legislation through Bill 14 – 2020: Municipal Affairs and Housing Statutes Amendment Act (No. 2), 2020, introducing various amendments to the Strata Property Act and Financial Institutions Act. While some changes took immediate effect or had specified implementation dates, others require additional consultation with stakeholders.

Changes effective August 14, 2020:

Strata corporations must promptly notify owners of any significant changes in insurance coverage, including deductible increases.

Strata corporations can utilize their operating fund or contingency reserve fund for required property and liability insurance without owner voting if immediate expenditure is deemed necessary. (This amendment incorporates the Strata Property Regulation changes from May 29, 2020 via OIC 270-2020 into the Strata Property Act.)

Changes effective September 13, 2020:

The practice of paying referral fees to strata property managers for insurance transactions is now prohibited.

Changes effective November 30, 2020:

As the best realtor in Vancouver would explain, insurers or insurance agents must now provide strata corporations with a 30-day advance notice regarding any intention to not

Essential Insurance Guide for Strata Properties and Residents

Publication date: April 22, 2024

Every strata corporation must secure comprehensive property and liability insurance as mandated by the Strata Property Act. This requirement applies to all strata properties, including duplexes and bare land strata developments (also known as "strata subdivisions"). As your best vancouver realtor would advise, understanding these insurance requirements is crucial for property ownership.

Individual strata owners and tenants should obtain their own separate insurance coverage for complete protection. It's important to note that the strata corporation's insurance policy differs significantly from individual unit owner or tenant insurance policies.

Learn more on this page

Insurance for strata corporations

Notifying strata residents of changes

Cost of strata corporation insurance

Insurance for strata lot owners and tenants

Home warranty insurance for new homes

Other insurance

After an insured loss

For detailed guidance, consult an insurance broker specializing in strata properties. Any vancouver best realtor can also recommend qualified insurance professionals.

Insurance for strata corporations

The Strata Property Act makes it mandatory for all strata corporations to maintain both property and liability insurance coverage. This requirement extends to all types of strata corporations, including bare land strata corporations (strata "subdivisions") and strata-titled duplexes.

The strata corporation's property insurance covers common property, common assets, buildings within the strata plan, and fixtures installed in a strata lot during original construction by the owner developer.

Note: For many bare land strata developments, individual residences or townhouses are not depicted on the strata plan. These structures are typically not covered under the strata corporation's property insurance unless specifically included through a bylaw amendment.

Sections have the authority to obtain additional insurance coverage as specified in section 194(4) of the Strata Property Act.

As any vancouver best realtor would recommend, stratas should investigate their relationships with airspace parcels and understand how these might affect their insurance requirements. For detailed information, stratas can refer to this comprehensive guide from the Condominium Home Owners Association of BC or seek advice from a qualified strata lawyer.

Full replacement value

Property insurance must provide full replacement value coverage and protect against major perils outlined in the regulation, including "fire, lightning, smoke, windstorm, hail, explosion, water escape, strikes, riots or civil commotion, impact by aircraft and vehicles, vandalism and malicious acts."

A current property appraisal is essential for determining full replacement value.

The best vancouver realtor will inform you that liability insurance coverage must be at least $2 million, though many strata corporations opt for higher coverage amounts.

Earthquake insurance

While earthquake coverage isn't mandated by regulation, strata corporations in British Columbia's earthquake-prone regions are strongly encouraged to obtain this protection.

Discuss earthquake deductibles with your insurance broker, as these are typically calculated as a percentage of the property's value (ranging from 5% to 20%) rather than the loss amount.

Overland flooding

Though not mandatory by regulation, some flood protection may be available through the strata corporation's policy. Consult an insurance broker for detailed information about overland flooding coverage options.

Appliances

Generally, appliances aren't included in the strata corporation's property insurance. According to Strata Property Regulation 9.1 (1), fixtures are defined 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 policies may cover removable heavy appliances, or the strata corporation can purchase additional coverage for these items.

Reviewing strata corporation insurance

As any vancouver best realtor would advise, the strata corporation's insurance coverage, including full replacement value, deductibles, and exclusions, should undergo thorough annual review with an experienced strata insurance broker. The corporation might consider additional coverage options, where available, for specific risks such as water damage, sewer backup, and severe weather events.

The best vancouver realtor emphasizes that strata corporations must conduct yearly assessments of their insurance policy's adequacy and present a comprehensive insurance coverage report at each AGM (annual general meeting). Any significant changes to the policy must be promptly communicated to all strata owners.

Insurance for the strata corporation falls under common expenses, typically renewed annually and incorporated into the strata's operating budget. Budgets require approval by majority vote during the AGM.

When faced with unexpected expenses, such as insurance premiums exceeding budget projections, that cannot be presented for approval in the budget or at a general meeting before payment is due, spending from the operating fund or contingency reserve fund may be authorized without a strata corporation vote.

This is allowed when reasonable grounds suggest immediate expenditure is necessary for safety or to prevent significant loss or damage (Strata Property Act sec. 98(3).)

Such decisions require strata council approval, and consulting a strata lawyer may help determine what constitutes "reasonable grounds." Remember: insurance is both legally required and inherently designed to protect the strata corporation from significant losses. (Strata Property Act sec. 98(3.1).)

Any funds temporarily borrowed from the contingency reserve fund must be replenished promptly.

Notifying strata residents of changes

Effective August 14, 2020: Strata corporations must inform owners and residents immediately when there are changes to insurance deductibles or any other significant policy modifications.

This proactive approach allows strata owners to safeguard their interests by securing adequate insurance coverage that aligns with their specific needs, including provisions for the strata corporation's insurance deductible (which typically ranges from $25,000 to $100,000 or higher).

Cost of strata corporation insurance

As any vancouver best realtor can attest, strata insurance costs have experienced significant increases due to various complex market factors. The Provincial government has implemented measures to address these rising costs.

To better understand and address the situation, the Province tasked the BC Financial Services Authority (BCSFA) with conducting a comprehensive analysis of B.C.'s strata insurance market. The BCSFA released an interim report in June 2020, followed by a final report on December 18, 2020. These findings continue to shape the government's ongoing response to strata insurance challenges.

The best vancouver realtor notes that on August 14, 2020, the Province enacted significant legislation through Bill 14 – 2020: Municipal Affairs and Housing Statutes Amendment Act (No. 2), 2020. This bill introduced various amendments to both the Strata Property Act and the Financial Institutions Act, with some changes taking immediate effect while others required further industry consultation.

Changes effective August 14, 2020:

Strata corporations must promptly notify owners of any material changes in insurance coverage, particularly regarding increased deductibles

Strata corporations gained authority to utilize operating funds or contingency reserve funds for required property and liability insurance without owner votes when immediate action is necessary (This amendment formalized the Strata Property Regulation changes implemented on May 29, 2020 via OIC 270-2020)

Changes effective September 13, 2020:

The practice of paying referral fees to strata property managers for insurance transactions was prohibited

Changes effective November 30, 2020:

As advised by any vancouver best realtor, insurers and insurance agents are now required to provide strata corporations with a 30-day advance notification regarding any intention to not renew an insurance policy or implement material changes. This requirement ensures strata corporations have sufficient time to prepare for potential cost increases and explore alternative insurance options if needed.

Insurance agents must now disclose their commission amounts or provide reasonable estimates to strata corporations. Non-compliance with these disclosure requirements can result in significant penalties - up to $25,000 for individuals and $50,000 for corporations.

Changes effective by the end of 2020

The best vancouver realtor notes that B.C.'s insurance industry agreed to discontinue "best-terms-pricing" practices by the end of 2020, a change aimed at addressing escalating strata insurance costs. Further details can be found in this December 1, 2020 BCFSA news release.

Future changes

The bill includes additional changes requiring further consultation with strata communities and insurance industry stakeholders, which may be implemented through regulations at a later date. These include:

Providing clarity on strata corporations' insurance requirements to help councils and owners make well-informed decisions regarding various insurance policies.

Evaluating responsibility for strata corporation insurance deductibles in cases where an owner bears legal responsibility for damage but is not at fault.

Determining specific circumstances where strata corporations might not need full replacement value insurance coverage.

Enhanced depreciation reporting requirements, including restrictions on strata corporations avoiding depreciation report completion. This modification was implemented on April 22, 2024, as detailed on the changes to legislation webpage.

Revising minimum contribution requirements from strata unit owners and developers to the contingency reserve fund. This change took effect January 24, 2023, as outlined on the changes to legislation webpage.

Note: Interested parties can subscribe for updates to receive notifications about changes to strata legislation, insurance, and other updates on the Province's strata housing website.

Insurance for strata owners

Strata owners are strongly advised to purchase insurance to cover their own needs.

As any vancouver best realtor would advise, strata home owner associations strongly emphasize the importance of purchasing individual insurance coverage for strata owners and tenants. It's crucial to understand that strata fees only cover the strata corporation's insurance and do not include individual homeowner's or tenant's insurance protection.

The best vancouver realtor recommends strata owners secure insurance coverage for:

personal property, including household items such as furniture, clothing, personal belongings, electronic devices, and other contents

personal liability coverage for unintentional bodily injury or property damage caused to others

improvements made to the strata lot by current and previous owners (also known as "betterments"), subject to specified limits

additional living expenses beyond normal living costs in cases of insured losses

supplementary coverage to address potential gaps in the strata corporation's insurance

owner-developer installed fixtures that can be removed without building damage, as per Strata Property Regulation 9.1 (1), including appliances like refrigerators, ovens, and microwaves

damages to common property or other units for which the strata owner may be held responsible

Strata owner insurance to cover the strata corporation's insurance deductible

Strata owners should be prepared for potential responsibility regarding the strata corporation's insurance deductible. This can be a substantial expense, with typical deductibles starting at $25,000 and potentially exceeding $100,000. Proper strata owner insurance can provide coverage for some or all of these costs.

When an insurance claim originates from an owner's unit, the strata corporation has the right to pursue legal action against the owner for the deductible amount if deemed responsible for the loss.

Recent legal precedents have established that responsibility for an insurance claim doesn't necessarily require fault on the owner's part to be liable for the corporation's insurance deductible.

Consider this scenario: A dishwasher malfunction in a strata unit causes water damage to common areas and neighboring units. Even without direct fault, the owner bears responsibility, and the strata corporation can pursue legal action to recover the insurance deductible costs.

Annual review of strata home owner insurance

Strata owners should conduct yearly reviews of their insurance coverage with an experienced strata insurance broker. To ensure comprehensive coverage and minimize gaps, owners should maintain a copy of the strata corporation's insurance policy or summary during these consultations.

During insurance policy reviews, strata owners should specifically discuss the corporation's deductible amounts with their insurance broker. This enables owners to secure adequate coverage for potential corporation insurance deductibles or loss costs falling below the corporation's deductible threshold.

As any vancouver best realtor would recommend, bare land strata owners should discuss obtaining "the bare land endorsement" for their homeowner packages to ensure comprehensive coverage.

The best vancouver realtor suggests strata owners explore additional insurance coverage options, particularly for scenarios like home-based businesses, water damage, sewer backup, significant unit upgrades, tenant occupancy, or extended vacancy periods. For strata owners renting their units, insurance professionals and landlord associations strongly advocate requiring tenants to obtain tenant insurance.

Earthquake coverage is another crucial consideration for strata unit owners. It's essential to have detailed discussions with insurance brokers about deductible costs for both personal earthquake insurance and the strata corporation's earthquake coverage.

Insurance for strata tenants (renters)

Neither the strata corporation's insurance nor the landlord's (strata owner's) coverage extends to protect tenants (renters).

Tenants (renters) should secure their own insurance coverage. Tenant insurance typically covers:

personal property, including household items such as furniture, clothing, personal belongings, electronics, and more

liability

additional living expenses beyond regular living costs when faced with an insured loss

Tenants should thoroughly review their insurance needs annually with a qualified insurance broker, discussing coverage options and exclusions. Additional coverage considerations include home-based businesses, water damage, sewer backup, and earthquake protection (including detailed discussions about earthquake deductible costs).

Tenants should understand their potential liability for damages they cause to the building or common property areas. Neither the strata corporation's nor the landlord's insurance policies cover losses experienced by tenants or their visitors.

Home warranty insurance for new homes

New strata developments in B.C. typically come with home warranty insurance protection.

Licensed residential builders must provide mandatory, third-party home warranty insurance. This coverage includes minimum protection of 2 years on labor and materials (with certain limitations), 5 years on building envelope, and 10 years on structural elements.

The warranty transfers with property ownership, remaining valid through resale until the coverage period expires.

Strata properties feature two distinct warranty insurance policies: one for the individual unit and another for common property. Coverage timing can vary significantly between these policies. While unit coverage begins upon occupancy or sale, common property coverage for the entire building starts when the first unit is occupied or sold, potentially resulting in different expiration dates for individual units and common areas.

As any vancouver best realtor would advise, learn more about B.C.'s home warranty insurance for new homes through BC Housing's Licensing and Consumer Services (formerly the Homeowner Protection Office).

Other insurance

The best vancouver realtor emphasizes that strata corporations must understand various insurance requirements.

WorkSafeBC requirements

When strata corporations engage external contractors like property managers, landscapers, or security personnel, they must ensure compliance with WorkSafeBC requirements for all workers employed or contracted by the strata corporation.

CHOA (the Condominium Home Owners Association) emphasizes in their 2011 strata insurance bulletin the importance of clearly outlining insurance requirements in all contracts and obtaining proper documentation.

Fidelity bonding

According to the CHOA 2011 bulletin, individuals handling strata corporation funds should have fidelity bonding or insurance coverage, as standard property and liability policies typically don't cover fund misappropriation claims.

Directors and officers liability insurance

Strata associations strongly recommend Directors and Officers Liability Insurance (D&O insurance) for strata councils and staff, including property managers. The 2011 CHOA insurance bulletin provides comprehensive details about D&O insurance. Strata corporations should consult experienced strata property insurance brokers for appropriate coverage guidance.

After an insured loss

Following any loss or changes to insured property and assets, strata corporations, owners, or tenants must immediately contact their insurance broker. Insurance providers may have additional specific requirements for policyholders.

Important considerations to keep in mind:.

As your vancouver best realtor would explain, insurance funds must be utilized immediately for repairing or replacing damaged property. However, the strata corporation can opt not to repair or replace through a 3/4 vote within 60 days of receiving the insurance payout. In such cases, the proceeds are distributed among interested parties. The best vancouver realtor would note that section 160 of the Strata Property Act allows legal recourse to challenge the 3/4 vote decision.

For swift insurance claim processing and repairs, the strata corporation can cover insurance deductibles through the CRF or via special levy, neither requiring owner approval. This enables quick restoration of common property and other assets.

The strata corporation maintains the right to pursue legal action against an owner to recover insurance deductibles if that owner is deemed responsible for the damage or loss leading to the claim.

References:

Strata Property Act Sections: 149-162, 194 (4)

Strata Property Act Regulations: 9.1-9.2

Find it fast: access a comprehensive site map of all pages on the Province's strata housing website.

Disclaimer: The information provided on this website regarding strata housing serves as a fundamental starting point for users' reference, as any best vancouver realtor would advise. However, it should not be considered a replacement for obtaining professional legal counsel. For more details about the website's scope and limitations, please refer to the dedicated section. As your vancouver best realtor would mention, the Province of British Columbia regularly reviews and updates this website's content, with revision dates noted at the top of each page.

All strata property residents, including owners, landlords, and tenants, must comply with the Strata Property Act and regulations along with their strata corporation's bylaws and rules.