Strata Insurance in BC: The Deductible Gap That Can Cost an Owner Six Figures

Most condo buyers in the Lower Mainland read the strata fees, check the contingency reserve fund, and move on. The largest single financial risk of owning a strata lot is in a document they often never open.

It is the insurance summary, and specifically the deductible.

The gap in plain terms

The strata corporation carries a policy on the building structure and common property. That policy has a deductible, and in BC that deductible commonly runs from $100,000 to $750,000 or higher.

When a claim is made, the insurer pays above the deductible. Somebody pays the deductible itself.

That somebody can be you.

How an owner ends up liable

Section 158(2) of the Strata Property Act lets a strata corporation sue an owner to recover the deductible where the owner is responsible for the loss or damage that gave rise to the claim.

Here is the part that catches people. BC courts have applied a low threshold to that word. An owner can be deemed responsible, and required to pay, without being at fault and without being negligent. The test looks at whether the owner was the primary cause of the mishap, or answerable for it. Proving negligence is not required.

The practical version: a supply hose behind your washing machine fails at 2am. You bought a good machine, you had it installed properly, you did nothing wrong. Water reaches four units below. The claim originates in your unit.

You may be looking at the deductible.

What the 2021 amendments did

Bill 14 amended the Strata Property Act across several fronts at once: depreciation reports, insurance disclosure, the scope of mandated coverage, and owner responsibility for the deductible.

On the deductible, the amendment enabled a cap on an owner's responsibility in the situation where the owner is responsible for the loss but not as a result of any act or omission by the owner. That is aimed squarely at the failed-hose case, where the claim starts in your unit and you did nothing wrong.

How the cap applies to a specific building is a question for the building's own documents and for a lawyer reading them. The amendment limits the exposure in defined circumstances, and owners still carry it.

What your own policy has to do

The strata policy covers the building. Your policy has to cover the four things it does not:

1. Your household contents. Everything inside your walls.
2. Your personal liability. Damage you cause to other units and to common property.
3. Living expenses. Where you stay if your unit is uninhabitable during repairs, which for a serious water claim can run months.
4. The strata corporation's deductible. Usually a named limit you select.

Point four is the one people get wrong, because the coverage exists but the limit is too low. An owner policy with $25,000 of deductible coverage, in a building with a $250,000 water deductible, leaves $225,000 sitting with you.

Set the limit against your building's actual deductible. That number is in the insurance summary, which means you have to read it before you can buy the right policy.

What to ask for before you buy

Request the insurance summary attached to the Form B Information Certificate. It sets out the building's coverage and its deductibles.

Then do three things with it:

Read the deductibles by peril. Water and fire are often different numbers in the same building, and water is usually the higher one. Water claims are the common ones in Lower Mainland buildings, so that deductible is the figure to plan around.

Take it to your broker before subject removal. Ask for a quote on an owner policy with deductible coverage matched to that building. If the broker cannot get the limit you need, that is information about the building, and it is better to have it while you still have a subject to remove.

Read the minutes for claims history. Council minutes, annual general meeting minutes and the depreciation report together show what has been claimed and what the council decided to do. Two years is a reasonable minimum.

A high deductible on its own does not mean a building has a problem. Deductibles rose across the entire BC market. What distinguishes buildings is the claims history and the response to it. A building that had repeated water claims, repiped, and then stopped having claims is telling you something different from a building with the same claims and no plan.

This work belongs alongside reading the depreciation report and understanding what strata fees include. Those three documents tell you what the building will cost you to own. Budget more time for them than for viewing the unit.

If you rent your unit out

Your tenant needs their own policy. The strata policy does not cover their contents or their liability, and your owner policy is written for you.

Tenant policies are usually inexpensive, and requiring proof of one in the tenancy agreement is standard practice. Without it, a claim caused by your tenant can land on you as the owner.

What this comes down to

• The strata policy covers the building, and not your contents, liability, living expenses or the deductible.
• BC strata deductibles run from $100,000 to $750,000 or higher.
• Section 158(2) lets the strata sue an owner for the deductible, and courts have found responsibility without requiring negligence.
• The 2021 Bill 14 amendments enabled a cap where the owner is responsible but not through any act or omission of their own.
• Buy owner insurance with deductible coverage matched to your building's actual number.
• Get the insurance summary from the Form B before your subject removal date.
• Contact our team to review a building's documents with you, or browse listings.

Plan your next step

Use the strata review chapter to work through the documents in order, and the home-buying guide to organise the rest of your subject conditions around them.