Restoration claims in multi-unit & strata buildings

If you own or rent in a condo, townhouse, or other multi-unit property, understanding your insurance responsibilities is crucial. There have been sever claims recently in our area where tenants did not understand their responsibilities in a large loss scenario, and a few had total losses that were not covered.

Did you know:

The building’s insurance (held by the strata) covers the structure, common property (like lobbies, hallways, or roof), and original fixtures—but not your personal belongings or upgrades done by owners.Strata insurance also includes liability protection for injuries or damage in common areas—but not for incidents inside individual units.

Owners and renters should always carry their own policies to cover:

• Personal contents and valuables
• Upgrades or improvements (ex: new floors, custom kitchens)
• Additional living expenses if you need to move out for repairs
• Personal liability for incidents inside the unit
• Your share of high deductibles if the strata’s building policy is triggered.
• Building policies don’t usually cover earthquakes—this is an extra cost often missed but highly recommended in BC.
• Insurance Deductibles: If a resident is found responsible for damage that triggers the strata building policy, the owner can be required to pay the full deductible—often thousands of dollars—unless they have their own coverage for this possibility.
• Uninsured Common Areas: In some cases, specific common areas like parking lots, gardens, or recreational facilities may not be fully insured by the strata, creating additional exposure for owners.

Knowing where your insurance ends and strata’s begins helps avoid surprises after an emergency. Always review both policies with your broker, and never assume your building policy will cover your losses inside your home.

Here are 10 key questions you should ask your strata council about insurance policies:

1. What does the strata corporation’s insurance policy specifically cover, including property, common areas, and liabilities?
2. Can I obtain a copy or summary of the current strata insurance policy for review?
3. Are there any recent or expected changes to the strata insurance, such as deductible increases, coverage reductions, or exclusions?
4. Does the strata council review the insurance annually and report coverage adequacy at the AGM?
5. What is the full replacement value coverage for the building, and when was the last appraisal done?
6. Are owners named insureds under the strata policy, especially for claims involving common property?
7. How are insurance deductibles handled if a claim involves an individual unit or owner responsibility?
8. What optional or additional coverages does the strata have or recommend (e.g., earthquake insurance, Directors and Officers liability)?
9. Does the strata notify owners promptly of material policy changes or claims that could affect premiums or coverage?
10. Is there guidance or support from the strata council to help owners identify and fill insurance gaps with their individual policies?

Asking these questions helps owners understand strata insurance limits, ensure adequate coverage, and minimize surprises in the event of a loss. It also fosters clear communication between owners and the strata council regarding risk management and insurance responsibilities.

A very common scenario we see in our business is confusion around what (or whose) insurance policy covers what loss, or what portion of loss. Often tenants assume that if the damage was not originated in their unit or caused by any fault of their own that they will not be responsible (or their insurance) for repairs. This could not be further from the truth. Here are a few scenarios for you to consider:

Scenario 1: Water Damage from Neighbor Above

If the unit above your unit floods and damages your living room furniture and flooring, who is responsible for the damages?

• Strata building insurance will typically cover damage to the building structure, original fixtures, and drywall up to the developer’s standard, but not your personal belongings or upgrades.
• Your personal condo/tenant insurance is needed for all contents, furniture, and improvements beyond the original specifications of the unit.
• If the upstairs neighbor is found negligent (e.g., left a tap running), their insurance may cover your losses, but this can take time to resolve; in the meanwhile, claim through your own policy.
• Owners are often responsible for paying strata insurance deductibles—sometimes tens of thousands of dollars—if damage in their unit causes a building-wide claim.

Scenario 2: Fire in a Neighboring Unit

If a fire starts next door and impacts your unit:

• Strata insurance repairs the building and common areas, and restores interiors to original condition.
• Owner’s/home insurance pays for any personal items lost, temporary accommodation, and upgrades/improvements to the unit.

Scenario 3: Pipe Burst in Common Area

Damage from a burst pipe in a shared hallway:

• Strata policy covers the repair to the structure and original finishing, including impacted units.
• Individual insurance is needed for contents and personal loss (e.g., electronics, clothing).

Scenario 4: Flood from Overland (Heavy Storm)

Street-level water enters multiple units:

• Many strata building policies do not automatically cover overland flood damage; check with your building.
• Individual flood insurance may be required for protection; without this, owners may pay out-of-pocket.

In today’s strata and multi-unit environment, staying informed about insurance responsibilities is essential to protecting both your property and your peace of mind. By understanding not only what your strata’s policy covers—but, just as importantly, what it does not—you can ensure there are no unpleasant surprises in the event of a loss. Regularly reviewing your own policy, keeping up to date with strata insurance changes, and communicating clearly with your council all help strengthen your personal protection. With proactive planning and attention to coverage gaps, owners and renters alike can enjoy the benefits of strata living with greater confidence and security.