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Blog by Irene Wong & Mike Mulligan

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Insurance & Strata Property - Things you Need to Know

Obtaining appropriate property insurance is a very prudent idea, particularly when strata property is involved. As an owner of a strata lot you need to be aware that there will be 2 policies involved. One must be purchased by the Strata Corporation (on behalf of all the owners), which is mandated & regulated by the Strata Property Act & Regulations. The second is the owner's policy for their strata lot & personal possessions.

Owners should familiarize themselves with who is responsible for the repair & maintenance of common property, limited common property & strata lots. 

The Standard Bylaws, set out in the act, identify these things & can be modified by amendments to the bylaws for your strata.  Individual agreements between the strata corporation & owners can also amend these responsibilites.  These might occur when permission is requested & granted for improvements to a strata lot or common property by an owner. Always get these in writing, as they become an asset when it's time to sell or provide proof to insurance companies that the changes were authorized & done correctly.

Owners should take a copy of their strata's current Bylaws & Summary of Insurance (typically attached to the AGM notice) with them when purchasing their insurance (owner insurance must compliment the strata corporation policy). 

The Strata Property Act limits the strata corporations responsibility of repair to those finishings identified in the original Developer's final Prospectus. Improvements, such as new flooring, cabinets, appliances, paint, mouldings, fixtures, etc. made since then will not be fully covered. The obligation is only to a value & quality similar to the original item.  Therefore, it is recommended that owners request "replacement value coverage" for improvements to their unit, even if done by a previous owner.

Don't assume that damage repair to your strata lot or possessions resulting from a source located within the common property of the complex (e.g. burst water pipe in hallway) will automatically be covered by the strata corporation or it's insurance. Insurance deductible amounts have skyrocketed during the past few years, typically now $5,000 to $10,000, rendering the point of a claim mute if the cost of repair is less than the deductible.

Problems arising from failure of structural issues or the exterior ARE identified in the Strata Property Act as the resposibility of the Strata Corporation, in which case, they typically would cover the repair costs.

Strata councils do have the authority to authorize payment of repairs, without seeking additional owner approval, typically from an operating fund like the contingency reserve fund & may cover costs, but aren't obligated to unless it falls under one of the areas discussed above. However, you are urged to ensure that you have appropriate coverage & liability within your personal policy just to be safe.

When problems do occur a first course of action would be to get the respective insurance companies to work towards a resolution.  Barring that & an unsympathetic council, the Strata Property Act does have a provision for suing the Strata Council, whereby you would not be liable for the Strata Council's costs, just yours (you don't share liability for the expenses incurred when you sue yourself in essence). 

Resolution of matters between individual owners would be done directly or with their respective insurers.

Mixed use strata (residential & commercial), duplex, leasehold & co-op properties may have unique insurance requirements & options, don't forget to ask.

Be certain to have an informed discussion with your insurance provider, shop around for coverage that best matches your needs & keep abreast of changes to the Strata Property Act, your strata bylaws & agreements entered into by your council with other owners.