Strata Corporation and Owner Insurance

Many strata lot owners believe that the Strata Corporation’s insurance policy covers all their risks or alternatively are not aware that they need personal insurance coverage.  Under Section 149(1) of the Strata Property Act, a Strata Corporation is only obliged to insure the fixed structure, permanently installed original fittings and fixtures, mechanical equipment and machinery, fire suppression systems and common assets of the Strata Corporation.  This is the insurance that a strata lot owner pays as part of their strata fees noted in the Strata Corporation’s annual operating budget.

Property insurance required for Strata Corporation
149  (1) The strata corporation must obtain and maintain property insurance on
(a) common property,
(b) common assets,
(c) buildings shown on the strata plan, and
(d) fixtures built or installed on a strata lot, if the fixtures are built or a installed by the owner developer as part of the original construction on the strata lot.
(2) For the purposes of subsection (1) (d) and section 152 (b), “fixtures” has the meaning set out in the regulations.
(3) Subsection (1) (d) does not apply to a bare land strata plan.
(4) The property insurance must
(a) be on the basis of full replacement value, and
(b) insure against major perils, as set out in the regulations, and any other perils specified in the bylaws.

Definitions for section 149 of the Act
9.1    (1)  For the purposes of sections 149 (1) (d) and 152 (b) of the Act, “fixtures” means 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.
(2) For the purposes of section 149 (4) (b) of the Act, “major perils” means 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.

Minimum liability insurance
9.2  For the purposes of section 150 of the Act, the strata corporation must obtain and maintain liability insurance for a minimum amount of $2 000 000.

Given this, it is highly recommended that strata lot owners obtain insurance for their strata lot for the following:

• It is extremely important that owners know that the insurance policy for the Strata Corporation does not cover personal belongings in case of a loss.  If personal belongings are damaged from a loss, such as, but not limited to, a water escapement, fire or sewer back up, only a strata lot owner’s personal policy will cover belongings.  Each owner and tenant should purchase insurance coverage for his/her belongings.  Additional living expenses should also be added to a personal policy in case the need to live elsewhere while the strata lot is being repaired arises.

• Owners must ensure they are covered personally for any upgrades to the unit.  The Strata Corporation’s insurance policy only insures original fixtures.  An example of this would be hard surface flooring in a unit that originally contained carpet when constructed.  

• A personal policy should also include a Strata Corporation deductible section in case a strata lot owner, tenant or someone associated with the strata lot causes damage.  Personal insurance policies offer a strata deductible, which then reimburses the deductible imposed by the Strata Corporation on the strata lot owner due to a claim caused by the owner or tenant.  Sometimes this deductible is built into the insurance package and other times it is offered as optional coverage for an additional premium.  It is recommended to review the amount of available insurance coverage for the strata deductible with your insurance broker.  Please refer to your most recent Notice of Call (agenda) for your Annual General Meeting (AGM) to obtain a copy of the Strata Corporation’s insurance policy.

For example, if a strata lot owner, tenant, or individual associated with the strata lot overflows a sink or a bathtub and the Strata Council finds that the owner, tenant or individual associated with the strata lot was the cause of the resulting damages, the Strata Corporation can sue the owner for the insurance deductible.  This amount can be several thousands of dollars.

• All strata lot owners must maintain all items within their own strata lot.  If a leak occurs from these items; the strata lot owner will be responsible for all repair costs or the insurance deductible if a claim is filed.  The below list includes some of these items, but is not exhaustive:

o Tiles and grout on shower and bathtub enclosures;
o Washing machine hose connections;
o Dishwasher connections;
o Fridge water connections for ice makers;
o All visible pipes under sinks;
o Toilet supply lines;
o Toilet seals and;
o All appliances.

• Owners may wish to consider employing a professional contractor to carry out regular inspections and maintenance of these items.

Section 161 of the Strata Property Act contemplates that an owner may obtain his or her own insurance to cover risks that are not covered by the Strata Corporation’s policy.

Owner’s insurance
161  (1) Despite the Insurance Act or any other law, an owner may obtain and maintain insurance for any or all of the following:
(a) loss or damage to the owner’s strata lot and the fixtures referred to in section 149 (1) (d)
(i)  against perils that are not insured by the strata corporation, and
(ii)  for amounts that are in excess of amounts insured by the strata corporation;
(b) fixtures in the owner’s strata lot, other than the fixtures referred to in section 149 (1) (d);
(c) improvements to fixtures referred to in section 149 (1) (d);
(d) loss of rental value of the owner’s strata lot in excess of insurance obtained and maintained by the strata corporation;
(e) liability for property damage and bodily injury, whether occurring on the owner’s strata lot or on the common property.
(2) Despite this Act, the Insurance Act or any other law, an owner of a strata lot in a bare land strata plan may obtain and maintain insurance on buildings or fixtures built or installed on the strata lot.

Additionally, some Strata Corporation bylaws require each strata lot owner to have personal insurance and state that strata lot owners are responsibility for the deductible amount, or any damage up to the deductible amount in the event of a loss. 

Section 158 (2) of the Strata Property Act also provides that the Strata Corporation is permitted to sue a strata lot owner to recover any deductible paid by the Strata Corporation.  Furthermore, some Strata Corporations have adopted bylaws requiring a negligent or careless owner to pay the deductible without the Strata Corporation needing a court order to confirm this negligence or carelessness.

Insurance deductible
158  (1) Subject to the regulations, the payment of an insurance deductible in respect of a claim on the strata corporation’s insurance is a common expense to be contributed to by means of strata fees calculated in accordance with section 99 (2) or 100 (1).
(2) Subsection (1) does not limit the capacity of the strata corporation to sue an owner in order to recover the deductible portion of an insurance claim if the owner is responsible for the loss or damage that gave rise to the claim.

In order to ensure that you have adequate coverage in place, each strata lot owner should provide a copy of the Strata Corporation’s certificate of insurance that is contained in the Notice of Call (agenda) for each Annual General Meeting (AGM). 

Review and report on insurance
154  The strata corporation must
(a) review annually the adequacy of the strata corporation’s insurance, and
(b) report on the insurance coverage at each annual general meeting.

Each strata lot owner is strongly encouraged to obtain proper insurance coverage and ensure that if they have tenants in their unit, that their tenants also obtain adequate insurance.

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