Insurance for strata corporations and insurance for strata owners and renters

All strata corporations, regardless of size, must obtain property and liability insurance as specified by the Strata Property Act. This includes strata-titled duplexes and bare land strata developments ("strata subdivisions").

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 more complete information, readers should consult with an insurance broker who is knowledgeable about stratas.

Insurance for strata corporations

The Strata Property Act requires that the strata corporation obtain and maintain property insurance and liability insurance. This means all kinds of strata corporations must obtain insurance including bare land strata corporations (strata "subdivisions") and strata-titled duplexes.

The strata corporation’s property insurance is 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. 

Note: for many bare land strata developments, individual homes or townhouses are not shown on the strata plan and are typically not included in the strata corporation’s property insurance unless the strata corporation has taken responsibility by bylaw.

Sections are able to purchase some additional insurance as per section 194(4) of the Strata Property Act.

Stratas are also advised to check if they have relationships with airspace parcels and if and how that may impact their insurance needs. Stratas may wish to consult this article from the Condominium Home Owners Association of BC or speak to a strata lawyer for more information.

Full replacement value

Property insurance must be for full replacement value and insure against major perils as listed in the regulation: “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." 

Establishing full replacement value requires a current appraisal.

Liability insurance must be for a minimum of $2 million. (However, many strata corporations choose to insure for a higher amount than the minimum $2 million).

Earthquake insurance

Earthquake is not listed by the regulation and is not required as mandatory strata corporation property insurance. However, strata corporations in the earthquake-prone areas of British Columbia are strongly advised to purchase earthquake insurance.

Remember to discuss the cost of earthquake deductibles with your insurance broker as earthquake deductibles are typically shown as a percentage of the value of the property (which can range from 5% to 20% of the building value) - not the amount of the loss.   

Overland flooding

Overland flooding is not listed by the regulation and is not required as mandatory strata corporation property insurance. However, some flood coverage may be available under the strata corporation’s policy. For more information about overland flooding insurance, talk to an insurance broker.

Appliances

Appliances 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).

Reviewing strata corporation insurance

Insurance for the strata corporation, full replacement value, deductibles and exclusions should be carefully discussed and reviewed each year with a knowledgeable strata insurance broker. The strata corporation may also want to purchase coverage, if available, for water damage, sewer backup, severe weather losses or other coverage.

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). Any material changes must be communicated to strata owners as soon as feasible.

The strata corporation’s insurance is a common expense; it usually occurs annually and is part of the strata’s operating budget. Budgets are approved by majority vote at the AGM.

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

• This 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)].)
• This requires a decision by the strata council, and they may wish to consult with a strata lawyer to decide what “reasonable grounds” are. Note: 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)].)
• Any money used for this temporary purpose from the contingency reserve fund should be replaced as soon as possible.

Notifying strata residents of changes

Effective August 14, 2020: Strata corporations are required to let strata owners and residents know as soon as feasible when the insurance deductible for the strata corporation changes or any other material change to the policy occurs.

That way strata owners can protect themselves and purchase sufficient insurance to meet their needs including paying, for the strata corporation’s insurance deductible (which can range from $25,000 to $100,000 or more).

Cost of strata corporation insurance

Due to a variety of complex factors, the cost of strata insurance has increased. The Province has taken steps to help address this issue.

The Province directed the BC Financial Services Authority (BCSFA) to research the strata insurance market in B.C. The BCFSA published an interim report in June 2020, and a final report on December 18, 2020. The BCFSA report findings will further inform government’s response on strata insurance.

On August 14, 2020, the Province passed legislation. Bill 14 – 2020: Municipal Affairs and Housing Statutes Amendment Act (No. 2), 2020, with various amendments to the Strata Property Act and the Financial Institutions Act. Some amendments took effect August 14, 2020 or at specified dates. Other changes require further consultations with the strata community and the insurance industry.

Changes effective August 14, 2020:

• strata corporations are required to inform owners as soon as it is feasible of any material change in the strata corporation’s insurance coverage, including increasing deductibles; and
• strata corporations can use their operating fund or contingency reserve fund to pay for property and liability insurance required under the Strata Property Act or the strata corporation’s bylaws without a vote of owners, if there are reasonable grounds to believe that an immediate expenditure is necessary to obtain the required insurance. (This essentially puts the Strata Property Regulation changes made on May 29, 2020 via OIC 270-2020 into the Strata Property Act.)

Changes effective September 13, 2020

• referral fees to strata property managers from strata insurance transactions are prohibited.

Changes effective November 30, 2020

• amendments require insurers or insurance agents to provide 30-day advance notice directly to strata corporations of their intention to not renew an insurance policy or of any material changes to the policy. This change ensures strata corporations have advance warning of cost increases and have time to seek other insurance options if desired.
• insurance agents are required to disclose their commission amount, or a reasonable estimate, to strata corporations. Insurers who fail to meet these disclosure requirements face penalties of up to $25,000 for an individual or $50,000 for a corporation. 

Changes effective by the end of 2020

• The insurance industry in B.C. agreed to end “best-terms-pricing” which may have contributed to the cost of strata insurance increasing, by the end of 2020. More information in this December 1, 2020 BCFSA news release.

Future changes

Other changes included in the bill require further consultation with the strata community and the insurance industry and may be brought into force by regulation at a later date. These issues include:

• clarifying what strata corporations are required to insure, to help strata councils and owners make informed decisions on strata corporation, strata owner and tenant insurance policies
• considering which party pays for the strata corporation insurance deductible if the strata owner or owner was legally responsible for a loss or damage, but it occurred through no fault of their own
• identifying the circumstances, if any, when strata corporations are not required to get full replacement value insurance coverage
• strengthening depreciation reporting requirements, including limiting the ability of strata corporations to avoid completing depreciation reports. This change has been made April 22, 2024, please see the changes to legislation webpage.
• changing the minimum required contributions made by strata unit owners and developers to a strata corporation’s contingency reserve fund. This change has been made January 24, 2023 please see the changes to legislation webpage.

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Insurance for strata owners

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

Strata owners can purchase insurance for:

• personal property, e.g., household contents such as furniture, clothing, household goods, electronics, etc.
• personal liability for any bodily injury or property damage unintentionally caused to others
• improvements (“betterments”) to the strata lot made by the current and previous owners, up to a stated limit
• additional living expenses, over and above the normal costs of living, in the event of an insured loss
• additional coverage in case the strata corporation’s  insurance coverage is inadequate
• fixtures installed by the owner-developer if, as per Strata Property Regulation 9.1 (1), these can be moved without damaging the building such as fridges, ovens, microwaves and other items
• losses to common property or other owners’ units for which the strata owner is deemed responsible

Strata owner insurance to pay for the strata corporation’s insurance deductible

A strata owner may be required to pay the strata corporation’s insurance deductible. This could be a significant expense as deductibles of $25,000 are common and can range up to $100,000 or more. Strata owner insurance can cover some or all of this cost.

If an insurance claim for a strata corporation originates in an owner’s unit, then the strata corporation can sue the strata lot owner for the deductible if the owner is deemed responsible for the loss.

Recent court cases have determined that responsibility for an insurance claim does not mean that the strata owner must be at fault in order to be responsible for paying the corporation’s insurance deductible.

For example, a dishwasher overflows in a strata unit and causes water damage to common property and other strata lots. The strata owner is responsible and the strata corporation can sue the strata owner for the cost of the strata corporation’s insurance deductible even if the strata owner was not “at fault.”

Annually reviewing strata home owner insurance 

Every year the strata owner should consider discussing insurance for their strata lot, and exclusions, with a knowledgeable strata insurance broker. It is helpful for the strata owner to have a copy of the strata corporation’s insurance policy, or summary, with them in order to minimize or eliminate insurance gaps.

When reviewing the strata corporation’s insurance policies, strata owners should consider discussing with their insurance broker the strata corporation’s deductible amounts. That way a strata owner can purchase sufficient insurance coverage to pay for the strata corporation’s insurance deductible or for the cost of the loss, if it is less than the strata corporation’s deductible.

Bare land strata owners should also consider discussing “the bare land endorsement” for home owner packages so that adequate coverage is purchased.

The strata owner is also advised to discuss other insurance coverage needs such as for a home-based business, water damage, sewer back up, major upgrades done to the unit or if the unit is to be occupied by a tenant or left vacant for periods of time. Insurance brokers and landlord associations also recommend that strata owners who rent their units to tenants have their tenants agree to purchase tenant insurance.

Strata owners should consider purchasing earthquake coverage for their units. Remember to discuss the cost of the deductible for both the owner's earthquake insurance and the strata corporation's earthquake insurance with an insurance broker.

Insurance for strata tenants (renters)

The strata corporation’s insurance and the landlord’s (strata owner’s) insurance will not cover tenants (renters).

Tenants (renters) are advised to purchase insurance to cover their needs. Tenant insurance can be purchased for:

• personal property, e.g., household contents such as furniture, clothing, household goods, electronics, etc.
• liability
• additional living expenses over and above the normal cost of living in the event of an insured loss

Insurance for the tenant (renter), and exclusions, should be carefully discussed and reviewed each year with a knowledgeable insurance broker. Coverage may also be purchased for: a home-based business, water damage, sewer backup and earthquake (remember to discuss the cost of the earthquake deductible with the insurance broker).

Tenants can also be held responsible for damage they may cause to any part of the building or common property in which they or others live. Losses suffered by, or incurred by, tenants or their visitors are not covered by the insurance policies of the strata corporation or the landlord.

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. As 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.

WorkSafeBC requirements

For example, 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 (the Condominium Home Owners Association) advises in a 2011 strata insurance bulletin that “the Strata Corporation should ensure that insurance requirements are spelled out in any contracts” and get copies. 

Fidelity bonding

The CHOA 2011 bulletin further 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." 

Directors and officers liability insurance

Strata associations also recommend that strata corporations and sections purchase Directors and Officers Liability Insurance (often called D&O insurance) for their strata council and any staff such as a strata property manager. This 2011 CHOA insurance bulletin provides additional information on D&O insurance. Strata corporations and sections should also discuss insurance coverage with an insurance broker who is knowledgeable about strata properties.

After an insured loss

After a loss or a change in insured property and assets it is very important for the strata corporation, strata owner or tenant to immediately contact the insurance broker. 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. The insurance proceeds are then allocated among “persons with an interest.” 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 (without requiring a vote of approval by owners) or by special levy (without requiring a 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 sue an owner to recover the strata corporation’s insurance deductible, if the owner is responsible for the loss or damage that gave rise to the claim.

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

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