Insurance (22:XIII)

This information applies to British Columbia, Canada. Last reviewed for legal accuracy by the Law Students' Legal Advice Program on July 24, 2023.

A. Division of Insurance

Section 149 of the SPA outlines the property insurance that the strata corporation is required to obtain and maintain. The strata corporation’s duty to insure does not cover the same areas as the strata corporation’s duty to repair and maintain common property.

The strata corporation is required to insure:

• Common property;
• Common assets;
• Buildings shown on the strata plan (which, in a conventional strata plan, covers the entirety of all strata lots);
• In the case of a conventional strata plan: fixtures on each strata lot that were installed by the owner developer as part of the original construction of the strata lot.

Note that for the purpose of section 149, “fixtures” does not take its common law definition, and instead takes a specific definition from section 9.1(1) of the SPR. This definition of “fixtures” refers to elements attached to the building and necessarily includes floor and wall coverings, and electrical and plumbing fixtures. However, for any other item, if it can be removed without causing damage to the building, it will not count as an original construction fixture that the strata corporation must insure.

The strata corporation’s property insurance must protect against “major perils” (SPA, s 149(4)(b)). The SPR defines “major perils” in section 9.1(2) as any of the following:

1. Fire or explosions;
2. Smoke;
3. Lightning, windstorms, or hail;
4. Water escape;
5. Strikes, riots or civil commotion;
6. Impact by aircraft or vehicles;
7. Vandalism or malicious acts.

Under section 161(1) of the SPA, owners may obtain insurance for:

• Loss or damage to their strata lot in excess to that covered by the strata corporation’s insurance;
• Fixtures in their strata lot that are not covered by the strata corporation’s insurance;
• Improvements to fixtures referred to in section 149(1)(d);
• Loss of rental value by the owner’s strata lot in excess to that covered by the strata corporation’s insurance;
• Property damage and bodily injury occurring on either their strata lot or common property.

B. Insurance Deductibles and Co-Insurance Clauses

1. Insurance Deductibles

Most strata corporation insurance policies have deductibles that apply to the various coverages under the policy. The minimum deductibles are typically determined by market conditions and can be increased by a strata corporation, but if determined to be excessive, it can be argued that the strata corporation has failed its duty to obtain insurance, per Stevens v Simcoe Condominium Corp. No. 60, 1998 CanLII 18852 (ON SC).

The payments of insurance deductibles is set out in s 158(1) and (2) of the SPA:

1. Subject to the SPR, the payments of an insurance deductible in respect of a claim on the strata corporation’s insurance is a common expense to be contributed to by means of strata fees calculated in accordance with s 99(2) or s 100(1);
2. Subsection (1) does not limit the capacity of the strata corporation to sue an owner in order to recover the deductible potion of an insurance claim if the owner is responsible for the loss or damage that gave rise to the claim.

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