Understanding Your Condo Insurance
Learn the ins and outs of your homeowner's policy and what limits you need to watch out for.
When does your policy stop paying the strata?
Let's break down the carriers who sell condo insurance online. Not all are the same. Look for coverage similar to "Condo Owner's Protection Coverage", "Strata Deductible Coverage", or "Condo Deductible Protection". These limits must be sufficient to pay the Strata's Water Damage Deductible amount. If your policy does not meet these limits, get a quote & top it up.
Unit owner's responsibility.
Condo unit owners may not be legally obligated to buy insurance, but many strata associations mandate it in their bylaws. This insurance covers liability, including payment for water damage caused by a unit owner to other units and common areas. Owners need to be aware of and follow their strata association's bylaws on insurance to fulfill their responsibilities and contribute to community risk management.
The high cost of water damage
Water damage claims in high-rise buildings incur high costs primarily due to the potential for extensive and multi-level damage. In these structures, a single water-related incident can impact multiple floors and units, exponentially increasing repair and remediation costs. High-rises often have complex mechanical and plumbing systems and high-end finishes, making repairs both complicated and costly.
Additional costs may arise, such as specialized mold remediation and displacement expenses for residents if units become uninhabitable. Repairing damaged areas in a high-rise setting is logistically challenging, requiring specialized equipment and labor, adding to the overall expense. Consequently, a water damage incident in a high-rise can quickly escalate into a significant financial burden.
Common Questions Answered
Condo owner should know that the building’s master insurance policy, typically managed by the condo association or strata, covers the exterior and common areas of the property. It does not extend to the interior of individual units or cover personal belongings.
Condo owners should regularly review and adjust their coverage to reflect changes in property value, renovations, and personal property acquisitions. This ensures comprehensive protection against potential risks.
Buy Online: Excess Water Damage for BC Condos
It's easy! stratadeductible.com is simple and convenient. Follow these steps to get a quote for the excess coverage you need to fill your coverage gap.
Step 1: Enter your current strata protection limit. eg: $100K
What do you have? Enter Your Homeowner's Policy limit for "Strata deductible assessment". Learn more.
Step 2: Enter the strata's water damage deductible limit: eg $500K
What do you need? Enter Your Strata Insurance Deductible Amount for Water Damage under "water damage". Learn more
Know your gap. If you have one, our policy will provide excess insurance, filling the void and protecting you from steep strata deductible charges for water damage you may unintentionally cause. Rest easy, knowing you're covered.
Decoding Your Condo Policy FAQs
Find answers to commonly asked questions about your homeowner's insurance policy.
Strata deductibles are a key component of a strata corporation's insurance policy, defining the amount the strata must pay out-of-pocket before insurance coverage kicks in for a claim. Understanding how deductibles work is crucial for both the strata corporation and individual unit owners. Here's a breakdown:
- Definition of a Strata Deductible:
A deductible is the amount that the strata corporation is responsible for paying before the insurance company covers the remaining costs of a claim.
This is similar to a deductible in a personal insurance policy, but it applies to the common property and assets managed by the strata.
- Types of Deductibles:
Deductibles can vary based on the type of claim – for instance, water damage, theft, fire, earthquake, etc.
Some types of claims, like those for earthquake or water damage, might have significantly higher deductibles due to the higher risk and potential cost of these incidents.
- Impact on Strata Corporation:
The strata corporation is responsible for the deductible amount in the event of a claim involving common property or shared assets.
If the cost of the damage is less than the deductible, the strata corporation typically covers the entire amount.
- Impact on Individual Unit Owners:
In cases where an incident originates from an individual unit (e.g., water damage from a burst pipe in a unit), the strata may seek to recover the deductible amount from the unit owner responsible for the damage.
This is where unit owner’s personal insurance (like homeowner’s insurance) plays a crucial role. It can cover the strata’s deductible if the owner is held responsible.
- Large Deductibles and Special Assessments:
For large claims with high deductibles, the strata corporation might need to levy a special assessment if the deductible amount exceeds the strata's contingency reserve fund.
This means individual unit owners might need to contribute to cover the deductible.
- Choosing Deductible Levels:
Strata corporations decide on their deductible levels when selecting their insurance policy.
A higher deductible usually means lower insurance premiums, but it also increases the financial burden on the strata in the event of a claim.
- Importance for Unit Owners:
Unit owners should be aware of the strata's deductibles and ensure that their personal insurance policies can cover these deductibles where applicable.
In summary, strata deductibles represent a crucial financial consideration for both the strata corporation and the individual unit owners. It's important for all parties to understand these deductibles and prepare accordingly, both in terms of strata policy selection and personal insurance coverage.
This term implies comprehensive coverage for various types of property owned commonly by the strata. It's a broad categorization designed to encompass a wide range of property items that the strata might have. Instead of listing specific items or types of property, the policy covers 'property of every description,' which provides a wider safety net against potential losses.
This phrase specifies how the insurance policy will pay out in the event of a claim. 'Per occurrence' means that the policy will cover losses that happen as a result of a single event, incident, or occurrence. There is usually a maximum limit that the insurance company will pay for each individual occurrence as well as the total aggregate which is the accumulative total sum of multiple claims.
Business Interruption insurance in the context of a strata (condominium) building policy is designed to cover the loss of income that a strata corporation might suffer after a disaster. This type of insurance is particularly important for strata buildings that generate income, such as through commercial units or leased spaces.
Earthquake and Flood (Overland Water) coverages in a strata building insurance policy are crucial in providing financial protection against damage caused by these specific natural disasters. Each coverage addresses different risks:
Earthquake Coverage: This coverage is designed to protect against damage caused by an earthquake. It can include damages to the building structure, common areas, and possibly individual units, depending on the policy's specifics.
Deductibles: Earthquake insurance often comes with high deductibles, reflecting the significant potential cost of earthquake damage. The deductible is usually a percentage of the building's value or the insured amount.
Exclusions: It's important to note what the policy does not cover, such as land subsidence or damages occurring after a certain time following the earthquake.
Flood (Overland Water) Coverage: This coverage protects against damage caused by the overflow of inland or tidal waters, rapid accumulation or runoff of surface waters (like rainwater or melting snow), and waterborne ice.
Distinguishing from Other Water Damage: It's separate from other water-related coverages like sewer backup or water damage from plumbing issues. Overland flood coverage is specifically for water entering the property from the outside.
Deductibles and Limits: Similar to earthquake coverage, flood insurance might have higher deductibles and limits on coverage, which can vary based on the policy and the location's risk profile. Both types of coverage are particularly relevant for strata corporations in areas prone to these natural disasters. They provide a financial safety net, ensuring that the strata has the means to repair and rebuild after such catastrophic events, thus protecting the investments of the unit owners and maintaining the functionality of the building.
General Liability coverage in a strata building policy is an essential component designed to protect the strata corporation against various liabilities. This coverage typically includes Bodily Injury, Personal Injury, and Property Damage Liability. Here's a breakdown of each:
1. Bodily Injury Liability: This coverage is intended to protect the strata corporation if someone is physically injured on the strata property. It can cover medical expenses, legal fees, and damages if the strata is found legally responsible. Injuries could occur from slips and falls on common property, accidents involving strata maintenance equipment, or other hazards on the premises.
2. Personal Injury Liability: Personal Injury coverage goes beyond physical harm and covers non-physical injuries. This includes legal protection for issues like libel, slander, false arrest, wrongful eviction, and invasion of privacy. This is particularly relevant for strata councils or boards that might face allegations of such actions in the course of managing the strata property.
3. Property Damage Liability: This part of the policy provides coverage if the strata corporation is legally responsible for damaging someone else's property. This doesn’t cover damage to the property owned by the strata itself.
This could include scenarios where strata operations or negligence result in damage to a visitor's vehicle, or where a common property element causes damage to an adjacent property.
Strata Corporation Directors & Officers (D&O) Liability insurance is a specialized form of coverage designed to protect the individual directors and officers of a strata corporation against personal losses as a result of legal actions brought against them for their actions or decisions made in their official capacities. Here's an overview of what this insurance typically covers:
1. Legal Defense Costs: The primary benefit of D&O Liability insurance is to cover the cost of defending against a lawsuit alleging wrongful acts in the management of the strata. This can include lawyer fees, court costs, and any other expenses associated with a legal defense.
2. Settlements and Damages: If a lawsuit results in a settlement or the directors and officers are found liable for damages, this insurance can cover those costs, up to the policy limits.
3. Wrongful Acts: The term 'wrongful acts' may include a range of actions such as breach of fiduciary duty, mismanagement of funds, failure to maintain the common property, making decisions that go beyond their authority, and violations of strata bylaws or regulations.
4. Protection for Individuals: D&O Liability insurance is crucial because directors and officers can be held personally liable for their actions, which means their personal assets could be at risk in a lawsuit. This insurance helps to mitigate that personal financial risk.
5. Benefit to the Strata Corporation: While the insurance primarily protects individuals, it also benefits the strata corporation by encouraging qualified individuals to serve as directors and officers without fear of personal financial loss.
6. Exclusions and Limitations: Like any insurance policy, D&O Liability insurance has exclusions and limitations. It typically does not cover fraudulent, criminal acts, or intentional non-compliant behavior.
This type of insurance is critical for strata corporations because directors and officers often make decisions on behalf of the entire strata, and these decisions can sometimes lead to legal challenges. D&O Liability insurance provides a level of security and peace of mind for those serving in these voluntary, yet crucial roles within the strata corporation.
Broad Form Money and Securities coverage in a strata insurance policy is designed to protect against the loss of money and securities due to various risks like theft, robbery, or embezzlement. This type of coverage is particularly important for strata corporations that handle cash or securities as part of their operations.
Pollution Liability coverage in a strata insurance policy is designed to protect the strata corporation from the financial consequences of pollution incidents that occur on or emanate from the strata property. This type of coverage is increasingly important due to the strict environmental laws and potential for significant cleanup costs and legal liabilities associated with pollution. Some real world claims would be:
- Asbestos Discovery During Renovations
- Pesticide Runoff from Landscaping Activities
- Chemical Spill in a Shared Facility
Want more info? Visit the Strata Insurance Guide
Or try our Resource Search Page
Get Your Personalized Quote Today
Discover how stratadeductible.com can help you protect your finances by filling the gap between your current insurance coverage and the high deductibles imposed by strata corporations.