The current insurance situation in B.C. has been difficult for many strata corporations. The average premium increase ranges from 40% to 50% depending on where the strata is located; however, some high value/high risk strata corporations have seen increases in the 200% to 400% range. I have even seen one strata whose premium increased 700%. The good news is that seems to be the exception and not the rule.
The narrative around this problem has focused predominantly on premium increases, the lesser mentioned factor is that some strata corporations are also seeing their deductible amounts skyrocketing to levels that are not covered by personal insurance policies. For example, If your strata has a $500,000 water damage deductible and you only have $100,000 of coverage, you could be on the hook for up to $400,000 if there is a loss from your unit. This is a scary reality.
Some of the strata corporations that have found themselves in this position have chosen to be proactive and look at ways to reduce the risk and protect individual owners. One such strategy I have seen used[J1] in a couple buildings is to pass a bylaw to cap the amount individual owners are responsible for, and create a fund (by special levy) to pay for any damages above that cap amount yet below the deductible.
Assuming the water damage deductible is $500,000 and your personal cap is $100,000.
Your washing machine supply line fails and causes a leak that damages your unit as well as several units below and/or adjacent to yours. The total amount of the claim is $360,000. Relying on a bylaw that caps your loss to $100,000 that would be covered by your personal insurance policy, (assuming you have the appropriate coverage, which is highly recommended), you would only have to pay your personal deductible which often ranges from $500 to $2,000 depending on your policy.
The strata fund would then kick-in and pay the additional $260,000 cost for repairs. This fund would then be replenished in some way, potentially by a ¾ vote resolution at the next general meeting.
Using the above example, if the strata did not have this bylaw or the insurance fund you could be liable for the full $360,000.
In my opinion, this is a prudent and reasonable approach by the strata corporations unfortunate enough to find themselves in this predicament. It upholds the community spirit of strata living by sharing this risk among the group rather than increasing the risk to individual owners to an unreasonable level.
However, not everyone feels that way.
In a recent CRT decision, two owners of a strata lot challenged this approach as they felt it “…contravenes the Strata Property Act (SPA) and is significantly unfair to the owners.” Fortunately, the Tribunal Member did not agree and upheld the action taken by the strata corporation.
Here is a link to the full decision: https://decisions.civilresolutionbc.ca/crt/sd/en/item/487015/index.do
If you are in a strata that has been presented with a challenge such as this[J2] , you have options that should be explored. It is important to engage a lawyer and an insurance professional to help guide your strata.
Ryan Stenquist & Magurel Mic
Condo Clear Services Inc.