Insurance isn’t a sexy topic, but if you own a condo, taking a few minutes to learn how strata insurance works may be the best investment you make this year.
In my law practice, I receive calls every week from condo owners facing legal action and unexpected bills from their strata corporations ranging from $5,000 to $50,000 or more.
The one thing these owners have in common? They didn’t purchase homeowners insurance – or worse, they bought the wrong insurance and thought they were covered.
The Strata Corporation’s Obligations
Under the Strata Property Act, SBC 1998, c.43 every strata corporation must obtain insurance. This insurance must cover buildings, common property and common assets as well as original fixtures installed by the developer in every strata lot.
Responsibility to Repair
Understanding the repair and maintenance obligations of individual owners in your strata corporation is critically important. This is because you may be liable to pay your strata corporation’s insurance deductible if the strata corporation’s insurance claim is related to damage flowing from property that you are responsible to maintain and repair. These obligations are generally set out in the Strata Property Act and your own strata corporation bylaws.
Strata corporations are responsible for the maintenance and repair of common property and common assets. Often, they are also responsible for any significant maintenance or repair of limited common property such as balconies. Owners are usually responsible their strata lots, unless the strata corporation has taken responsibility under the bylaws.
Section 158(2) of the Strata Property Act allows strata corporations to sue owners to recover insurance deductibles where the owner “is responsible for the loss or damage that gave rise to the claim.”
The courts have interpreted legal responsibility under section 158(2) of the Strata Property Act to mean the responsibility to repair and maintain. In Mari vs. The Owners, Strata Plan LMS 2835, 2007 BCSC 740, the British Columbia Supreme Court upheld a lower court decision finding that “responsible for the loss or damage” under the Strata Property Act didn’t require any negligence on the part of an owner.
Hidden Danger of Expensive Deductibles
The Strata Property Act sets a minimum level of coverage for all strata corporations. It doesn’t establish a maximum deductible. While many strata corporations have insurance deductibles in the range of $5,000 to $10,000 for common claims such as water damage, some with a history of claims or a desire to keep costs down have chosen policies with deductibles of $50,000 or more.
Based on section 158 of the Strata Property Act and recent court decisions, many strata corporations now send owners a bill for the cost of the insurance deductible whenever a claim arises for damage in, or from, a strata lot.
How Can Owners Protect Themselves?
Encourage your strata corporation to purchase an insurance policy with low deductibles. In addition to protecting all owners from unexpected loss, individual owners may be able to save money on their personal insurance policies where the strata corporation has invested in a healthy level of coverage.
When choosing your personal insurance policy, remember that strata corporation insurance does not protect you against damage to your own personal property or any renovations or improvements you have made to your strata lot. You may also be on the hook if an accident occurs in your strata lot that causes damage to other units. Water and gravity often combine to cause significant damage in condominiums.
I always recommend that owners provide a copy of their strata corporation insurance policy to their insurance broker so that they can obtain a policy that fills in any gaps. You can find a summary of your strata corporation’s insurance coverage in your Annual General Meeting documents.
The Strata Property Act places strict limits a strata corporation’s ability to shift shared expenses to individual owners and while section 158 allows a strata corporation to sue an owner, it doesn’t give a strata corporation the right to act as judge and jury.
Finally, always remember that this article and the magic of Google can’t replace specific qualified legal advice. If you experience an accident or claim related to your strata property, be sure to seek legal advice from a knowledgeable strata lawyer.