If you’re involved with a real estate development team and are about to set up a strata corporation, your first thought should be figuring out your complex’s insurance needs, as the type of insurance you require will have a huge impact on strata fees and the livelihood of each owner at some point down the road. Likewise, if you’re part of an existing strata council and you are looking to switch providers, just know that you have options out there!
The world of strata insurance can be a confusing place with all its twists, turns, ifs and buts. However, understanding what strata insurance is will clear up any confusion over who needs it and who doesn’t. Here are the answers to some of the most common questions SeaFirst Brokers receive regarding strata insurance.
What Is Strata Insurance?
There are two types of insurance you should consider purchasing when you own a strata unit. The strata building policy, a.ka. the master strata policy, covers the strata corporation and is designed to insure the collective interests of the shareholders in the corporation. Strata insurance is available for commercial buildings, residential buildings, mixed-use buildings, and bare-land stratas. The condominium unit owner’s insurance policy is designed to cover the personal interests of the unit owner, such as their contents, improvements and betterments done to the unit, and personal liability
Read more about the different types of stratas here.
While every strata corporation is mandated and in charge of choosing a policy that represents the common grounds of the strata, it is up to individual owners to purchase separate condominium unit owner’s insurance for their units. In the end, it is the owners who all share the cost of the strata corporation’s insurance, as well as bear the cost of their own individual insurance.
What Does a Strata Corporation’s Insurance Policy Cover?
There are nearly 30,000 strata corporations in the province of British Columbia, and every single one of them must be insured as per provincial regulations. Strata corporation policies insure all of the buildings and structures as shown on the strata plan against perils like fires, floods, extreme weather, vandalism, and so on. The policy covers things like:
- Roofs, windows, doors, crawlspaces, framing, and exterior paint
- Common properties like hallways, staircases, pools, garages, gardens, and driveways
- Common property fixtures like lobby furniture, décor, and lighting
- Shared-use building maintenance supplies
- Some fixtures like original flooring and wall coverings
- Attached/built-in machinery like boiler rooms, elevators, and security systems
- Basic electrical systems and plumbing in each unit
- Liability for property damage and bodily injury that occurs on common property
Are Strata Corporations Required to Have Insurance?
Yes! By provincial law, all strata corporations must obtain, at a bare minimum, property insurance and liability insurance. Additional coverage is also available, based on the needs of each strata, and owners may vote on obtaining more or less coverage at their AGMs. Keep in mind that a good insurance policy will attract future buyers, as it shows them the building is well-managed.
How Does a Strata Corporation Decide on the Best Coverage to Get?
Since every strata is unique, there is a lot to consider when purchasing strata insurance, and many different packages are available. The policies become somewhat like the snowflakes of the insurance world as no two policies seem to be alike.
Please refer to our free guide, Choosing Strata Insurance: A Guide for Strata Council Members. This guide will give you the basic information you need to make a wise insurance decision, whether your strata corporation is professionally managed or self-managed, new or existing. We suggesting printing this off and presenting it to all of the strata council members if you’re thinking of making a switch.
What Does a Condominium Unit Owner’s Insurance Policy Cover?
When you purchase a strata unit, you have the option of buying homeowner’s insurance known as condominium unit owner’s insurance. This insurance covers things that are not covered by your strata corporation’s policy. In many ways, think of it partly as an insurance for your insurance.
Your personal condominium unit owner’s insurance covers things like:
- Damage to your personal belongings, including your furniture, clothing, electronics and major appliances, stemming from an accident you caused or otherwise.
- Damage to any upgrades you’ve made to the original unit. Think new flooring, countertops, cabinets, and so on.
- Contingency coverage: In a lot of plans, you can get contingency coverage, which insures your unit in case your strata corporation’s insurance policy falls short.
- Liability coverage: This type of coverage covers you for any accidental bodily injury or property damage you may cause to a third party.
- Loss assessment coverage: This type of coverage covers you if the strata’s common property ever needs an emergency repair and owners are required to pay out of pocket for some of the repair and/or hefty deductibles.
If you’re not sure what’s included in your current condominium unit owner’s policy, it’s best to meet with an insurance representative to ensure you have adequate coverage. They will ask you some questions to determine if you’re adequately covered, but don’t worry, they don’t get too personal!
Are Strata Unit Owners Required to Have Insurance?
Unlike with cars, strata unit owners are not required by law to obtain condominium unit owner’s insurance. While it’s highly recommended (extremely recommended, actually) to insure your personal interests mentioned above, you can still own your unit and live in it without having insurance. However, to qualify for a mortgage you’ll need to saddle up and show your investment is adequately insured. Most banks won’t do business with you if the property is unprotected!
How Does Strata Unit Insurance Differ from House Insurance?
Condominium unit owner’s insurance and house insurance are similar in many ways. The main difference is that condominium unit owner’s insurance offers a few unique elements of coverage such as Unit Improvements & Betterments, Loss Assessment, and Unit Owner’s Contingency Coverage, that don’t apply to house insurance. In many cases, condo insurance is also considerably cheaper than house insurance, as your monthly strata fees are partly going towards the rest of your insurance (the corporation’s policy).
Where Does Earthquake Coverage Fall Into All of This?
Condominium unit owner’s insurance doesn’t always cover earthquake damage; it’s usually optional. Some strata owners will opt for it if they live in an area that is considered to be of high-risk of earthquakes (yes, Southern Vancouver Island counts!).
If you own a strata unit, find out from a member of your strata council what the strata corporation already covers, and, more importantly what their deductible per unit owner works out to be. You likely have a cover of this lying around somewhere, given to you when you bought your place.
Where Can I Buy Strata Insurance?
Obtaining an insurance proposal is quick and simple. Just call SeaFirst today and one of our commercial brokers will be happy to assist you. Our team of insurance brokers are experts in the field of strata insurance and can help explain in all in plain English. We can assist you whether you are in Victoria, Brentwood Bay, Saanichton, Sidney, Salt Spring Island, Oak Bay, Westshore, or Pender Island. Just give us a call, or come by and see us!