STRATA CHANGES
• identify the circumstances , if any , when stratas are not required to get full replacement value insurance coverage ;
• strengthen depreciation reporting requirements , including limiting the ability of strata corporations to avoid completing depreciation reports ;
CHANGES TO THE BC
STRATA INSURANCE CRISIS
On August 14 , 2020 , the BC provincial government passed
legislation to lessen the impact of insurance challenges faced by strata corporations and owners . The legislation addresses several issues surrounding insurance renewals and increased risks and costs in the insurance market . Unfortunately , we don ’ t know yet how or when the insurance industry will respond .
In the interim , strata corporations in BC remain in an awkward situation because of their obligation to insure the full replacement value of all buildings , common assets , and fixtures held in the strata when there are no mandatory requirements for the insurance companies to provide insurance , maintain competitive cost , cover all risks , or even provide full replacement coverage for these items .
Additionally , there has been criticism regarding the practices of insurance brokers . These concerns are also being addressed through the legislative amendments . The revisions require brokers to now disclose the amount of their commissions and to notify strata corporations sooner and more extensively of changes to insurance coverage and costs , including an intent not to renew . The revisions also prevent brokers from paying commissions or fees to stratamanagement agencies representing other parties .
GOVERNMENT RESPONSE TO THE CRISIS
As of August 14 , strata corporations are required to let strata owners know as soon as is feasible when there is a change to the corporation ’ s insurance deductible or any other material change .
Furthermore , if an immediate expenditure is necessary to obtain the required insurance , strata corporations can now use their operating or contingency reserve fund to pay for the required property and liability insurance without a vote of the owners .
Other changes will be brought into force at a later date . These changes will achieve the following :
• set out clear guidelines for what strata corporations are required to insure to help strata councils make informed decisions on their insurance policies ;
• change the minimum required contributions made by strata unit owners and developers to a strata corporation ’ s contingency reserve fund ; and
• prohibit the payment of referral fees between insurers or insurance brokers and strata property managers or other third parties not licensed as insurance agents ( recognizing that this practice only occurred with some strata property managers ).
Stricter regulation ; increased transparency around reporting , commissions , and disclosure ; and changes to enhance the owners ’ responsibilities will all work to improve the strata insurance market . For more information on the BC strata insurance crisis and what Waypoint can do to help you as an owner , give us a call anytime at 310-8442 or send us your comments . +
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• protect strata unit owners against large lawsuits from strata corporations if the owner was legally responsible for a loss or damage but it occurred through no fault of their own ;
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