Dear Tony: I purchased a 12-year-old strata unit in Vancouver on Oct. 15.
My offer was submitted Sept. 15 and on the advice of my agent, I requested the normal documents of the strata corporation, such as minutes and an information form that included the depreciation report and parking and storage allocations. All the documents were in good order and provided excellent information. What I did not receive or realize was a critical document was the insurance information.
The building has a good claims history, with only one claim for an overflowed bathtub six years ago, but I was shocked to discover in the annual general meeting notice that the insurance that was renewed Sept. 1 has dramatically increased in cost, and the deductibles for the building have risen from $25,000 to $100,000. Had I known about the insurance situation, I might have considered other options or properties.
Is there a simple mechanism for buyers and owners to access insurance documents, or at least be aware of the current state of renewals and costs?
It also occurred to me that if I caused a claim in the building, I could be on the hook for a $100,000 deductible. I managed to obtain homeowner insurance to cover that amount, but it was also at significant additional cost.
Jenny M.
Recent legislative changes include several new obligations for strata corporations under the Strata Property Act, with two amendments that specifically apply to insurance disclosure and notice.
The first is with respect to owners and tenants. “A strata corporation must inform owners and tenants as soon as feasible of any material change in the strata corporation’s insurance coverage, including any increase in an insurance deductible.”
Prior to this amendment, strata corporations only had an obligation to provide a report on insurance as part of the annual general meeting. While the report on insurance remains an obligation, the strata cannot wait until the next AGM.
The best practice is to issue a copy of the insurance renewal summary that shows the deductibles, increases and any exemptions or exclusions immediately on receipt.
Owners might still be insuring their risks on their homeowner policies based on the $25,000 deductible, and yet the increase to $100,000 as part of the new policy is a liability that could occur at any time for any owner.
The second amendment that is critical for buyers applies to the summary of the strata insurance.
This change is pending a regulatory amendment and is not yet in effect. However, once it’s in force, the Form B Information Certificate, which provides a snapshot of the business affairs of a strata corporation at the time it was issued, must also include a summary of the strata corporation’s insurance.
The Form B is based on the requirements listed in Section 59 of the act; however, the act also has a published list of forms. Strata corporations should prepare for this regulatory change.
Even though this change is not yet in effect, a good tip for buyers is to always request a copy of the strata insurance summary and review the renewal dates and deductible values. You might also want to request a copy of the claims history, as a claim in the current year can have a significant impact on future insurance policy costs and deductible rates.
Tony Gioventu is executive director of the Condominium Home Owners Association
COVID-19 notice: As a precautionary measure to prevent the spread of COVID-19, CHOA staff are working remotely and our offices are temporarily closed. We understand these are challenging times for strata corporations and we are here to help. Even though CHOA advisers are working remotely, we are only a phone call or email away and able to assist you with hosting meetings and notice preparation.
