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New strata insurance clause from BCREA

by 5U Designer


Strata insurance rates are rapidly increasing across BC, affecting owners of strata properties, and potential buyers.

Your Board is working with the BC Real Estate Association (BCREA) and the Canadian Real Estate Association to explore ways to mitigate problems related to this issue.

To help REALTORS® protect their buyer clients, BCREA and the Standard Forms Committee developed a new strata insurance clause to use. 

BCREA announced the following today:

Many strata owners are facing significant increases in insurance rates and deductibles. There are also multiple older buildings across the province struggling to find an insurer to renew their policy. 

Potential buyers need to understand the insurance situation of strata units they’re looking at so they can make informed buying decisions. 

People who already own strata units need to be aware of the financial risks they face. For example, if a plumbing incident caused $75,000 in water damage to a strata owner’s unit and the strata’s deductible was $100,000, insurance wouldn’t cover the claim. In this case, the owner could have to pay for the damages out of pocket, depending on the strata’s bylaws. 

You play an important role in protecting your clients.

Working with buyers

  • Discuss insurance with your buyers to help them understand the situation. See the links below for more information.
  • Advise buyers to consult with insurance companies and agents who are knowledgeable about strata insurance and other insurance needs.
  • Include BCREA’s new Strata Insurance Clause in Contracts of Purchase and Sale (note: the clause and guidance will be available on WEBForms® on February 18):

 Subject to: (A) the Buyer reviewing and approving the terms and rates of the strata corporation’s insurance, including the premium amounts, deductible amounts, and coverage limits thereunder and the date of expiration of such policy or policies; and (B) the Buyer confirming the Buyer’s ability to obtain personal strata owner insurance on terms satisfactory to the Buyer, including coverage for any owner’s portions of deductibles payable under the strata corporation’s insurance, in each case on or before ________________. These conditions are for the sole benefit of the Buyer.   

Immediately upon execution and delivery of this Contract of Purchase and Sale by all parties, the Seller or the Seller’s agent, will obtain copies of the strata corporation insurance policy or policies, or a summary of coverages, a cover note or a binder in respect of same, and will immediately, upon receipt, deliver such document(s) or cause such document(s) to be delivered to the Buyer or the Buyer’s agent.  

Read BCREA’s latest blog post here for more information about the new Strata Insurance Clause. 

Working with sellers/owners

  • When listing the property, ask the strata owner to obtain a copy of the strata corporation’s insurance policy or policies.
  • Advise strata owners to get advice from their insurance provider to understand their liability if the insurance doesn’t cover the strata corporation’s deductible.
  • Ideally, each strata owner should:
    • have a unit owner’s insurance policy,
    • have a policy that covers the higher deductible (insurance deductible insurance) to cover a loss in their unit, and
    • understand the risk of not having enough coverage.

What BCREA is doing

In collaboration with CREA and BC's 11 real estate boards, BCREA is following all developments and taking the following steps: 

  1. Adding the Strata Insurance Clause and guidance to WEBForms® on February 18. This clause will help to ensure REALTORS® are adequately protecting their clients from strata insurance-related issues.
  2. Recommending that the Ministry of Municipal Affairs and Housing add a requirement to the Form B Information Certificate for proof of insurance, including terms, premiums, deductibles, and coverage limits. Read our letter to Minister Selina Robinson here.
  3. Publishing a podcast episode about this issue on February 27. Links to listen to the episode will be available in our monthly Resources for REALTORS® email.
  4. Participating in a stakeholder/government forum on this issue on March 17 led by the Insurance Bureau of Canada, and closely collaborating and sharing information with related stakeholders.

What caused this

Several factors have led to high strata insurance costs, including a building’s size and construction materials used, claims history, where a building is located, the number of unoccupied units or tenants, the high value of real estate, lack of regular maintenance and the high cost of repairs—especially in the Lower Mainland. 

Where to get more information