Strata Insurance: Understanding Coverage
Did you know that only 40 percent (estimated) of BC homeowners have personal insurance? This figure is even lower for tenants. Whether living in the unit or as an investor, unit owners should always make sure their personal assets and liabilities are adequately protected by their own personal insurance policy. A typical unit owner’s policy provides a variety of coverages:
Premiums are mainly based on the limit of insurance purchased, and such a limit should reflect the full replacement value of all household furniture and personal effects, including jewellery and other valuable items. All policies have special limits for such valuable items as jewellery, cash etc., and must be added to a scheduled rider in order to obtain the correct coverage. Most policies will also cover the personal property while it is temporarily off premises (with the owner on vacation, for example).
Additional Living Expenses
If the owner is forced to leave home due to a loss that’s covered, he or she may need substantial sums while the damage is being repaired and/ or replaced. In the case of an investment unit, such coverage helps pay the owner’s lost rental income.
Betterments & Improvements
The strata corporation’s Insurance policy will provide coverage for “fixtures built or installed on a strata lot, if the fixtures are built or installed by the owner developer as part of the original construction on the strata lot.” Any subsequent improvements or betterments will be left to the unit owner to protect. It is wise to ensure that the limit of insurance purchased for improvements and betterments accurately reflects the replacement value of all improvements or betterments forming part of the strata lot – whether or not such improvements or betterments have been acquired or installed by the current owner.
Strata Deductible Assessment
More and more strata corporations now have bylaws to facilitate charging strata deductibles back to unit owners responsible for a loss or damage. It doesn’t matter if the owners or their tenants are directly responsible for the loss or damage in question; in many cases, the mere fact that the damage originates in the unit – for example, a faulty washing machine that leaks and damages the suite below – is sufficient to make the assessment valid.
Strata deductibles can be as low as $1,000 and as high as $500,000. Unit owners’ personal policies cover this risk to a specific limit. Owners need to make sure they are fully insured.
This coverage provides protection for the owner’s share of levies for damage to the common property (not wear and tear) that may be charged for a variety of reasons. For example, it is imperative to protect yourself by purchasing adequate earthquake insurance with your personal insurance policy. In the event of a quake, it is probable that an assessment will be made by the strata corporation to recover your portion of the deductible owing on the strata’s insurance policy.
The deductible amount is a percentage of the total insurance value stated on the certificate of insurance or policy declarations. For example:
The $2 million would be split amongst unit owners by unit entitlement.
This protects for legal responsibility to others worldwide for claims arising from bodily injury, property damage, fees for legal defense, legal liability to occasional employees, voluntary property damage and voluntary medical payments, and covers liability arising from the use and ownership of the strata lot.
Each unit owner has specific insurance requirements which should be discussed with an insurance broker to ensure the right protection is in place - and at the right price.
Contact us today to learn more about how FirstService Residential can make a difference in your strata community.