Strata insurance can be confusing and daunting for first time buyers and even long-term renters.
We’ve put together a simple introduction to explain the difference between strata building insurance and strata unit lot insurance (that’s your unit!).
Strata building insurance
Strata insurance is a commercial policy. The intension of a commercial policy is not for personal or individual protection. The purpose of strata insurance is to cover insured perils of common property of a strata corporation. This includes areas such as hallways, stairs and elevators, common foyer, and of course the common general structure. It also includes underground services, parking lots and green or outdoor spaces.
Strata unit lot insurance
Strata unit lot insurance is a personal lines product. The intension of a personal line policy is for personal or individual protection. The purpose of strata unit insurance is to cover the contents inside a particular unit lot. It can also cover, if selected, loss of rental income/ additional living expenses, loss assessment, deductible loss assessment and provide personal liability coverage (Insurance Council of British Columbia n.d.).
Additionally, it covers the cost to replace unit improvements to the particular strata unit lot. Meaning, as the owner of that unit lot you may have renovated, rendering your unit slightly different from the original strata registry. This may alter the cost to replace the unit exactly as it was.
This is why it is important you speak directly with your insurance agent about your strata unit coverages.
As you may have noticed, there has been no mention of earthquake damage coverage. This is because strata buildings are not legally required to hold any. A BCFSA report explains, “… earthquake shake damage is not mandatory coverage required by strata legislation” (BCFSA 2020 pg. 23).
Strata unit insurance has the option to purchase additional earthquake coverage. In the event of an earthquake that causes damage to the building, earthquake coverage on your strata unit insurance can help cover your portion of the repairs. As well as your portion of the Common Strata Property deductible for earthquake damage.
I am renting my unit do I need insurance?
As a renter, you would still want to consider a tenant policy that covers your personal items, living expenses and personal liability should your contents sustain damage and/or the rented unit sustains damage rendering it unlivable by an insured peril or personal negligence.
British Columbia (n.d) Insurance for strata corporations and insurance for strata owners and renters. Retrieved march 22, 2021 from https://www2.gov.bc.ca/gov/content/housing-tenancy/strata-housing/operating-a-strata/finances-and-insurance/insurance#:~:text=Strata%20owners%20can%20purchase%20insurance,damage%20unintentionally%20caused%20to%20others
BCFSA (2020). Strengthening Foundations: A report on the State of Strata Property Insurance In British Columbia. Retrieved March 22, 2021 from https://www.bcfsa.ca/pdf/news/StrataReport2020.pdf
Insurance Broker Association of British Columbia (IBABC) (n.d.) Strata building and unit insurance. Retrieved March 22, 2021 from https://www.ibabc.org/get-to-know-us/managing-your-risk/36-regular-pages/get-to-know-us/200-strata-building-and-unit-insurance.html
Insurance Council of British Columbia (n.d.) Strata Insurance Policies. Retrieved March 22, 2021 from https://www.insurancecouncilofbc.com/consumer-information/consumer-advice/strata-insurance-policies/