British Columbia amends the Strata Property Act to tackle insurance concerns

26 June 2020

By Kevin Zakreski

With a bill introduced in the legislative assembly earlier this week, the British Columbia government is proposing amendments to the Strata Property Act to address concerns over the cost and availability of insurance for strata corporations. Bill 14 proposes a series of amendments that touch on depreciation reports, disclosure, the scope of mandated insurance coverage, and a strata-lot owner’s responsibility for a strata corporation’s insurance deductible.

The bill’s amendments include requiring disclosure of “a summary of the strata corporation’s insurance coverage” on a Form B Information Certificate. In addition, a strata corporation will be required to “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.”

Another amendment will clearly enable strata corporations to make payments for obtaining and maintaining mandated insurance coverage out of the contingency reserve fund. This legislative amendment works hand-in-hand with a recent change to the Strata Property Regulation.

Bill 14 will also amend the act to enable a cap on an owner’s responsibility for a strata corporation’s insurance deductible, “if the owner is responsible for the loss or damage that gave rise to the insurance claim but not as a result of any act or omission by the owner.” Under the proposed amendment, “the owner’s liability for the loss or damage is limited to the amount, if any, prescribed in respect of the class of the strata corporation and the class of the insurance claim.”

As the word “prescribed” in this quotation indicates, much of the bill’s legislative amendments amount to enabling provisions for future regulatory changes. The subjects addressed in these proposed regulatory changes were summarized in a government news release:

  • identify when stratas are not required to get full insurance coverage;
  • strengthen depreciation reporting requirements, including limiting the ability to use existing loopholes in the legislation to avoid completing depreciation reports;
  • change the minimum required contributions made by strata unit owners and developers to a strata corporation’s contingency reserve fund;
  • require brokers to disclose the amount of their commission, which has been reported to be at times in excess of 20%; and
  • strengthen notification requirements to strata corporations of changes to insurance coverage and costs, or an intent not to renew.

The government notes that “[t]hese regulatory changes will be made after further consultation with strata community stakeholders.”

In addition to amendments to the Strata Property Act, Bill 14 also amends the Financial Institutions Act to “end the practice of referral fees between insurers or insurance brokers and property managers or other third parties.”

The government characterizes Bill 14 as “taking a first step” in response to interim findings (PDF) on insurance in the strata-property sector made by the BC Financial Services Authority. Further steps may be taken when the BCFSA delivers its final report, which is scheduled for fall 2020.

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