Spotlight on strata insurance: Should the Strata Property Act require a strata corporation to inform the owners and tenants as soon as feasible of any material change in insurance coverage?
November 8, 2018
BY Kevin Zakreski
BCLI is running a public consultation on insurance issues for stratas. It is asking for public input into its proposed changes to the Strata Property Act , Strata Property Regulation , and Schedule of Standard Bylaws. For information on how to participate in the consultation please visit the Strata Property Law Project—Phase Two webpage.
This post is part of a series that spotlights issues discussed in the Consultation Paper on Insurance Issues for Stratas . To read other posts in the series please click here.
Brief description of the issue
The Strata Property Act requires the strata corporation to “report on the insurance coverage at each annual general meeting.” Some Canadian provinces go even further in requiring strata corporations to inform owners about insurance issues.
In Ontario’s strata-property review the authors recommended adding requirements to Ontario’s legislation for “prompt notification of owners” of any increase in an insurance policy’s deductible and if “the board cannot obtain directors and officers liability, errors and omissions insurance.” Ontario recently amended its legislation to implement this recommendation.
Should British Columbia follow Ontario’s lead and require the strata corporation to give notice of material changes in insurance coverage?
Discussion of options for reform
The main advantage of this proposed reform is that it would support one of the key features of insurance legislation for strata corporations: its coordinating function for strata corporations, strata-lot owners, and other potential actors in the insurance field. While the existing law calls for a report on insurance at the annual general meeting, there may be material changes between meetings. This opens up the possibility for gaps in coverage to appear. Increasing the flow of information from the strata corporation to others should reduce this risk.
The downside of this proposal is that it does create an additional administrative burden for strata corporations.
The committee’s tentative recommendation for reform
The committee favoured requiring strata corporations to inform owners and tenants of material changes in insurance coverage, promptly after the change occurs. In its view, such a provision will help to reduce gaps in insurance coverage. The committee decided that tenants should be included in the provision because they are, by virtue of the act, named insureds on the strata corporation’s insurance.
The committee tentatively recommends:
Section 154 of the Strata Property Act should be amended to require a strata corporation to inform the owners and tenants as soon as feasible of any material change in insurance coverage, including an increase in any deductible.