Condominium & Strata Insurance

A condominium corporation policy (or strata insurance policy) is the coverage purchased by the corporation to protect the building structure, common areas and (depending on the governing legislation and bylaws) unit interiors. Policies can be structured as Bare Walls, Single Entity or All-In. Bare Walls covers only the building shell and common elements. Single Entity adds coverage for unit interiors as originally built by the developer. All-In extends to the building, original interiors and owner upgrades. Your corporation’s governing documents and provincial legislation dictate which structure is required.

Understanding the coverage provided through a personal condominium policy and the corporation’s insurance package is essential for every owner and board member. The corporation’s policies cover the property and liability exposures the corporation is obligated to insure. This generally includes the property common to the corporation (buildings, site improvements, equipment and other such articles) and a minimum level of liability exposure for the corporation. The corporation’s insurance package may also include other coverages which, while not necessarily required by law, are prudent to protect the interests of the corporation and board. A unit owner’s policy will generally cover the owner’s personal property, improvements to their unit, certain assessments and their interest in the property (e.g. their unit) should the corporation’s insurance be inadequate. Additionally, a unit owner’s policy will cover their personal liability. Together, the insurance obtained by the corporation and unit owners provide fulsome coverage for insurable risks within the community.

In all jurisdictions, and typically under all policy forms, the corporation is responsible for the policy deductible. The options and mechanisms available to corporations to recover that cost from a unit owner, or a group of owners, vary by province. Within the allowances of provincial legislation and regulations, those options can be further clarified by the corporation’s bylaws or governing rules.

Where the cost of a deductible is validly assessed to a unit owner, that owner may have recourse through their personal insurance policy. Most unit owner policies contain coverage for valid deductible assessments so long as the policy covers the type of loss which gave rise to the assessment.

A depreciation report (called a reserve fund study in Ontario and Alberta) evaluates major building components to determine their remaining useful life and the funding needed to maintain them. In British Columbia, the Strata Property Act requires most strata corporations to obtain a depreciation report and update it regularly. Ontario’s Condominium Act requires reserve fund studies as well. Beyond compliance, a current depreciation report or reserve fund study can improve your corporation’s insurability and strengthen your position in carrier negotiations.

Directors and officers liability insurance provides critical protection for volunteer board and council members, defending them from liability allegations arising from decisions made on behalf of the corporation. While D&O coverage is not mandatory in all provinces, it is strongly recommended. With the increasing complexity of managing a corporation and the rising availability of low barrier legal tribunals in many provinces, D&O coverage is critical. Facts and details pertaining to matters in dispute are critical, so boards should carefully document their procurement and decision-making processes carefully and according to regulatory requirements.

Many unit owners, particularly cash buyers, do not maintain personal condo insurance policies. This creates a gap that can leave the corporation exposed when a claim occurs. HUB offers insurance compliance monitoring programs that provide a systematic way to confirm unit owner insurance coverage, verify that governing document requirements are met and monitor policy renewals throughout the year. Ensuring all owners carry adequate coverage protects the community and reduces the risk of uncollectable deductible chargebacks.

Non-renewals have become more common in the Canadian condominium and strata market, particularly in provinces with high catastrophic loss exposure. If your corporation receives a non-renewal notice, start the remarketing process immediately. A strata insurance broker with strong carrier relationships can access markets that generalist agents cannot, including specialty carriers and program administrators focused on condominium and strata corporations. HUB’s national platform and deep market access help corporations find competitive options even when coverage is difficult to secure.

Replacement cost appraisals should be reviewed regularly, with a third-party appraisal conducted at least every three years. In British Columbia, insurers typically require a current appraisal (within two to three years) to confirm full replacement value. Between appraisals, corporations should increase coverage limits by 4 to 5 percent annually to keep pace with construction cost inflation. Underinsurance is a significant hidden risk: many buildings across Canada carry coverage limits that do not reflect current rebuilding costs.