FAQ Strata Insurance

An owner and tenant are responsible for obtaining insurance coverage to cover risks that are not covered by the Strata Corporation’s insurance policy. Water damage caused within the condo that affects neighboring condos may not be covered.

The Strata Corporation insurance intends to cover the building as originally constructed by the developer. Each strata corporation’s insurance will vary.

Your contents, any improvement or betterment since the original handover from the developer, additional living expenses to cover your relocation costs after a claim, your liability for lawsuits, and deductible/loss assessment. Important to mention tenants.

Full Replacement Cost is included unless otherwise noted. If the Property of Every Description and Equipment Breakdown has the same limits noted, then Full Replacement Cost is in effect. Confirm this with your insurance broker.

Increasing costs and frequency of claims have led to poor results for insurers in the strata class of business. In response to ongoing financial losses and an analysis of a strata’s claims history, insurers are increasing deductibles to new minimum requirements.

Sprinkler Discharge means activation, discharge/leakage of a sprinkler head, a component of the fire suppression system unless directly resulting from fire, smoke, heat, or explosion. Sprinkler discharge is a type of water damage for which insurers sometimes require a higher deductible applied due to losses from this peril. If there is not a specific deductible noted for sprinkler discharge, insured losses would fall under the All Other Losses or Water Damage Deductible depending on the proximate cause of loss.

A unit that is uninhabited at the time of loss, regardless of the presence of furnishings, due to all previous occupants having terminated their residence without intention of lawfully returning, and no new occupants having taken up lawful residence.

Illegal Drug Activity means any activity relating to either the growing, cultivation, harvesting, manufacturing, distribution, or sale of any non-prescription controlled substance or substances enumerated in Schedule (Section 2) of the federal Controlled Drugs and Substances Act Narcotic Control Regulations C.R.C., c 1041 (an amended from time to time), whether or not the Named Insured is aware of such activity. Often, Illegal Drug Activity is excluded entirely from insurance, but coverage is afforded under our policy.

Flood means tsunami, waves, tides, tidal waves, or the rising, the breaking out, or the overflow of any body of water, whether natural or manmade. For strata insurance, owners cannot cause a flood (i.e. this is not a potential strata owner deductible assessment). The Flood deductible would be funded by all owners based upon unit entitlement if an assessment was required.

Wildfires of Note means “wildfires which are highly visible or which pose a potential threat to public safety”. The Wildfire deductible would be funded by all owners based upon unit entitlement if an assessment was required.

The earthquake deductible is applied as a percentage of the value of the buildings(s) damaged. The earthquake deductible minimum only applies if the percentage deductible is lower than the minimum stated, which is very rare. For example, a $10,000,000. building with a 20% deductible, a minimum of $250,000, would have a deductible of $2,000,000. (20% of $10,000,000. with a minimum of $250,000. irrelevant). Any special assessment to fund the strata earthquake deductible would be based on unit entitlement. To calculate the average earthquake deductible assessment for each owner, divide the strata earthquake deductible by the number of units. Using the above example, if there were 100 units, the average assessment to each owner would be $20,000. ($2,000,000. / 100).

Most Strata Corporation bylaws allow the Strata Corporation to assess the deductible to the source unit owner. Therefore, all owners must have personal insurance coverage to fund such an assessment in the event the strata loss results from their unit. Owners should carry coverage to the highest potential deductible assessment figure, which is typically the water damage deductible or sprinkler discharge deductible, if higher.

While the Strata Property Act requires the Strata Corporation to maintain insurance, the Act does not contain a duty to repair the strata lot. This means that if damage to the Strata Corporation property is below the deductible, all unit owners will typically be responsible for repairing their unit. Moreover, you can be responsible for repairing your unit even if the damage is caused by another unit or common property. You must have insurance to cover repairs to your unit below the strata deductible, and this coverage is often referred to as Unit Additional Protection under a personal insurance policy.

Get in touch with your current personal insurance provider to get this necessary coverage, and share the Summary of Coverage document outlining the Strata Deductibles.

Preventing claims is always best, and not limited to, but includes that you check and replace your supply lines, know where your water shut-off valves are located, consider water leak detectors, perform regular and preventative maintenance, never leave your appliances running while away from home, and consider installing sprinkler cages.