Questions from Insurance Webinar - March 21, 2023
Questions and Answers
- How can you enforce owners having insurance up to the strata deductible amount?
Some stratas pass this requirement as a bylaw, but it is challenging to administer and may or may not be enforceable. Having the strata council distribute an information letter to owners or inviting an insurance broker to come to a meeting and explain why this is prudent to owners can be very helpful.
- Can you write a strata bylaw to override Bill 14?
Unfortunately bylaws are unenforceable to the extent they contradict the Strata Property Act or it’s regulations.
- Will Bill 14 require each unit to submit an appraisal since how else will we know the value, correct?
Until the regulations are set, we won’t know what is required of each unit for stating their values and any recommendation can only be based on speculation. Should the bill proceed as is, this will pose a challenge for strata corporations to collect and maintain accurate records of all units. We will look to the provincial government for recommendations on implementation and compliance.
- Is an insurance appraisal mandatory?
An insurance appraisal is the only way to insure your property to a value that is equal to current replacement cost, which is a requirement of the Strata Property Act. Only a third-party professional firm should be trusted with this specialized calculation.
- On a new building, when should one get an appraisal?
An appraisal should be completed when the construction is nearing completion, prior to or by first occupancy.
- How can we get a list of qualified appraisal companies?
You can ask your broker if they have a list of preferred appraisers. You could also look to local property management and condominium association directories to see who is listed there. Typically only companies in good standing are granted membership.
- How does a strata council handle owners who are underinsured for their portion of deductibles?
We suggest contacting your strata broker as the policy may have Legal Expense Coverage. This coverage helps the strata with deductible assessments against unit owners.
- Our insurance appraisal was produced two months before our insurance was due. We were asked if we wanted to bump up our insurance for the remainder of the term. Are we obligated to do this as a strata council?
We suggest aligning your appraisal EFFECTIVE date with the strata's insurance renewal date. This will ensure your property values are always up to date, and the strata will avoid any midterm endorsements.
Typically, you would receive the appraisal up to two months in advance of the renewal date so that your broker can market your property and secure coverage. If the programs dates are aligned, there is no need to make any changes. The appraisal will be good for one year.
- Will the new $100k deductible reduce the cost of premiums?
There is no immediate reduction in premium. The higher deductible however decreases the number of claims filed as they all have to be larger losses. This in the long term reduces the strata's loss ratio and will result in the most competitive premiums available in the market.
- The standard deductible of $100,000 for high rise applies for all risks, or water/sewer backup only?
Typically Water Damage and Sewer Backup, unless the Strata has suffered a large All Risks loss such as fire.
- You say that premiums can be lowered if a strata completes better maintenance, yet no company have asked us about our maintenance history, so it is merely a reflection of the claims only.
We suggest providing your broker with all preventative maintenance being taken, or any plans in place. Any action to show the Strata is mitigating loss and taking care of the property will help brokers obtain more quotes from more insurers. This aids in presenting a lower premium as more insurers want to take on risks that have lower chances of claims.
- Rentals now allowed in all Strata complexes - does this increase our Strata insurance? Does it depend on how many units within a complex are rented?
Strata insurers typically show more concerns with properties that have 50% or more rentals. They will want all details pertaining to tenant screening, proof of tenants and landlord insurance, and access to common areas, etc. Some insurers may apply a higher rate depending on the number of rentals in the building.
- Will the new 100k deductible also affect townhouses?
Townhouses don't typically suffer the same severity of water losses as highrise towers. With highrises, there are more floors for the water to travel down and cause damage to. That being said, townhouses will only see these deductibles if they have suffered a large loss, OR if the strata replacement value is so high that some insurers require this minimum in order to come on risk.