Knowing what insurance to buy can be a challenge for condo owners, particularly first-timers who may be confused by what they need to insure and what the strata corporation’s policy covers.

A rule of thumb is that the strata corporation is responsible for insuring all common property while individual unit owners must buy their own insurance for personal property they bring into the unit or keep in a storage locker, such as furniture, appliances, clothing and jewelry. Owners should also buy personal liability insurance to cover claims that may arise from unintentional injury to other people or damage to their property either on the strata property or elsewhere.

It’s important to know that while the strata corporation’s policy will typically cover original fixtures and fittings such as floor coverings, cabinets and countertops, insuring upgrades such as new countertops, hardwood floors to replace carpet or any internal structural changes is the responsibility of the unit owner. This applies to not only improvements you might make, but also those made by previous owners.

Sarah Thompson, vice-president, marketing and real estate, HUB International Insurance Brokers, says condo owners should review the strata’s insurance policy, which is typically provided in the annual general meeting package or on request from the strata council or management company, to see what the strata is responsible for.

“It’s important to note the strata’s deductibles, as the unit owner may be charged back the deductible if they are found responsible for a loss that originates from their unit,” she says.

Thompson also advises owners to consult the Strata Property Act and their strata bylaws to determine what they are responsible for and when they could be charged back a strata insurance deductible.

She says strata bylaws may include provisions to charge back deductibles to individual owners whose action resulted in a claim under the strata corporation’s policy. A condo owner’s policy will usually cover this type of claim either in full or in part.

Thompson recommends all condo owners buy earthquake coverage and points out that less than 50 per cent have earthquake coverage. A simple calculation can show how much an owner could be liable for as their share of a strata’s earthquake deductible – and it’s an eye-opener.

For example, if a building’s replacement value is $50-million and the earthquake deductible is 10 per cent (i.e. $5-million) and there are 125 units, each owner could be liable for approximately $40,000.

While stratas can purchase an earthquake deductible buy-down policy to reduce the collective deductible to as low as three per cent, if it has not done so owners should purchase their own buy-down policies, says Thompson.

Consulting an insurance broker is probably the best way to ensure you have adequate insurance to avoid a financial shock if you need to make a claim, or if you are deemed liable for damage or injury originating in your unit.

The Condominium Home Owners Association of BC offers a checklist of key questions to ask your broker when buying condo insurance :

• What is the limit of coverage provided to me for the improvements in my unit?
• If my unit is uninhabitable due to an insured loss, what amount of coverage is provided for the additional living expenses I incur?
• If the strata suffers a loss that originates from my unit, what amount of coverage does my policy provide if I am charged back the strata’s deductible? (Take a copy of the strata’s insurance coverage with you so your broker can see the strata’s policy deductibles.)
• If there is damage in my unit, to original strata property (floors, ceilings, walls, but not improvements and betterments or personal property), and the damage falls below the strata corporation’s deductible, what amount of coverage does my policy provide to repair this damage?
• What is my limit of coverage provided for assessments made necessary by the strata’s earthquake deductible?

Insurance 101 for Condo Owners by Kathleen Freimond | Vancouver Sun