As of 2025, the strata insurance market in BC continues to face significant challenges with premiums increasing by an average of 40% year-over-year and deductibles often reaching $100,000 or more for water damage.
According to recent BCFSA data, over 60% of strata corporations now face deductibles exceeding $50,000, compared to just 15% in 2020. This dramatic shift has created new financial realities that all strata owners and councils must understand and prepare for.
Understand everything you need to know about strata insurance and deductibles.
What are Strata Deductibles?
A strata deductible is the portion of the strata corporation’s insurance policy that must be paid before a claim can be made.
Strata insurance usually covers the building’s structure, common areas, and shared facilities, but when damage occurs, the deductible is the agreed-upon out-of-pocket cost that must be paid before the insurer will pay for the remainder.
Example
To illustrate how deductibles work, let us consider an example. Let us say that a strata corporation used to have an insurance policy that had a $10,000 deductible. When water damage occurred to the tune of $45,000, the strata paid the $10,000 deductible as the insurer covered the other $35,000. If the deductible increased to $75,000, however, the strata would cover the entire $45,000 as it is lower than the new deductible.
The Different Types of Strata Deductibles
Strata deductibles can vary based on the type of risk being insured. The following are some common types:
Earthquake Deductibles
They are typically applied as a percentage of the building’s insured value, typically in the range of 10% to 15%. For example, if a building is insured for $40 million and has an earthquake deductible of 15%, the earthquake deductible for strata would be $6 million. This might be split amongst all of the owners on a unit entitlement basis, which might have devastating cost implications for the individual owners.
Water Damage Deductibles
These are customary due to the frequency of water claims. Water damage deductibles can be as much as $10,000 to $50,000 or higher, depending on the policy and the type of loss.
General Property Deductibles
These offer coverage for a wide range of damages not particularly listed under other headings, such as fire or vandalism. Deductibles for this kind of claim can also vary significantly.
The Reason Behind The Increase in Strata Insurance Deductibles
As many of you know, the strata insurance market has seen premiums and deductibles skyrocket, and the BCFSA reports that’s not changing anytime soon. For strata owners, the premium increase impacts them directly in the way of higher maintenance fees. But the impact of higher deductibles is equally significant:
1. Your strata will no longer be able to make claims that would have been paid under your old policy deductibles.
For example, if your strata previously had an insurance policy with a $10,000 deductible and experienced a loss of $45,000 due to a water leak, you used to pay the $10,000 deductible and the insurer would cover the balance. Now, assuming your deductible has risen to $75,000, all $45,000 of the water loss would need to be paid by your strata.
This means that when something does go wrong, you are less likely to be able to rely on your insurance to help.
2. You will personally pay more for condo insurance.
On top of the higher premiums you pay via your maintenance fees, your own personal insurance policy costs will rise. Why? Your policy — in addition to covering your personal effects and any unit upgrades — was previously premised on insuring the strata’s former deductible in case the loss had arisen from your unit. That is the equivalent of your insurer’s exposure being your loss and the strata’s $10,000 deductible.
Your condo insurance policy is now required to cover the new strata deductible, which for example’s sake is now $75,000. With some strata deductibles rising to $250,000 or more, some owners can’t obtain adequate coverage at any cost!
The result of this is that your own policy premiums are going to rise (and it’s likely your personal deductibles will rise as well!).
When do Condo Owners Need to Pay the Deductible?
Condo owners may need to pay a strata deductible in the following circumstances:
Damage Originating from Your Unit
When damage originates in your unit—like a busted pipe or kitchen fire—you can be held responsible for the cost of damage incurred by common areas or other units. In these cases, you could be responsible for paying the strata’s insurance deductible or even pay out-of-pocket for damage to property or injury caused by the event.
Held Responsible Under Bylaws
Strata bylaws tend to outline instances where a unit owner becomes responsible for paying for some damages. If the strata corporation determines you’ve breached these bylaws, they can bill you the deductible. Understanding strata councils in BC and their authority is essential for navigating these scenarios.
Shared Common Property Deductibles
Sometimes, if a loss or damage to common property cannot be attributed to a specific unit, the deductible might be divided among all owners, shared throughout the strata community.
For instance, if a fire in the common area causes $100,000 in damage and the deductible is $20,000, the strata may opt to split the deductible among all of the owners if no specific unit is to blame.
Prevention Strategies to Reduce Claims and Keep Deductibles Manageable
Strata boards and individual owners can take proactive steps to prevent common causes of insurance claims:
For Strata Boards
- Implement a comprehensive maintenance schedule for building systems.
- Conduct regular inspections of plumbing, electrical, and roofing.
- Install water leak detection systems in high-risk areas.
- Develop and enforce clear bylaws regarding owner responsibilities.
- Consider hiring a risk management consultant to identify potential hazards.
- Review your strata financial statements regularly to ensure adequate funding for maintenance.
For Individual Owners
- Install water shut-off devices in units.
- Regularly check appliance connections and hoses.
- Never leave cooking unattended.
- Turn off water supply when away for extended periods.
- Report maintenance issues in common areas promptly.
- Understand your strata fees and how they relate to insurance coverage.
Reserve Fund Planning in the Era of High Deductibles
With rising deductibles, strata corporations need solid financial planning to handle potential claims. Proper planning can mean the difference between manageable expenses and financial crisis when damages occur.
Building a Strong Contingency Reserve
The foundation of financial resilience begins with maintaining an adequate contingency reserve fund. This fund should be robust enough to cover the current deductible amounts for your policy’s most common claim types. For example, if your water damage deductible is $75,000, your reserve should ideally be able to absorb this cost without significantly depleting the fund.
Creating a Specialized Deductible Fund
Many forward-thinking strata corporations are now establishing a separate “deductible reserve fund” specifically for covering insurance deductibles. This dedicated fund provides peace of mind and ensures that regular maintenance and operations won’t be compromised when insurance claims arise.
Adjusting Strata Fees Appropriately
Regular review and adjustment of strata fees are essential to accommodate higher insurance costs and reserve fund contributions. While fee increases are never popular, transparent communication about the connection between fees and financial security can help owners understand the necessity. Consider exploring special assessments as a potential funding mechanism when necessary.
Essential Guidelines for Strata Boards
Strata councils bear significant responsibilities when it comes to managing insurance matters for their buildings. These responsibilities extend beyond simply purchasing a policy and include ongoing management, communication, and strategic planning.
Conducting Annual Insurance Reviews
Every strata council should schedule a comprehensive review of coverage with insurance professionals at least once a year. This review should examine not just premium costs, but also coverage limits, exclusions, deductible amounts, and any new insurance products that might benefit the strata. Invite your insurance broker to present at a council meeting and explain any changes or recommendations.
Developing Effective Communication Plans
Clear communication about insurance matters is crucial for maintaining owner trust and cooperation. Develop a structured approach to communicate insurance changes to owners that includes multiple channels (email, notice boards, meetings) and provides context for why changes are occurring. When owners understand the reasoning behind insurance decisions, they’re more likely to support necessary measures like fee increases.
Performing Comprehensive Risk Assessments
Prevention is always less expensive than claims. Conduct regular risk assessments of the property, focusing on high-risk areas like plumbing systems, electrical infrastructure, roof conditions, and fire safety equipment. Consider bringing in specialized consultants to identify potential issues before they lead to claims. Document these assessments and track the implementation of recommended improvements.
Other Commonly Asked Questions
How do I find out what my strata’s deductible is?
You can find this information by reviewing your strata’s insurance policy documents, which are typically available at the annual general meeting (AGM) or from your property manager. Understanding how to read strata documents is crucial for all owners.
What is the typical deductible amount in BC?
Strata deductibles vary per policy, but common ranges are $10,000 to $50,000 or more for certain risks like water damage. Earthquake deductibles are most often a percentage of the building value that is insured. The BC Financial Services Authority provides updated regulatory information on strata insurance.
Can Strata Corporations Force Unit Owners to Pay the Full Deductible?
Yes, if the strata determines that a specific owner is liable under their bylaws, they can charge that owner the full deductible. The Insurance Council of BC provides consumer advice on these matters.
How quickly must strata corporations notify owners of insurance changes?
Under the Strata Property Act, strata corporations must inform owners about any material changes to insurance coverage as soon as feasible. The Province of British Columbia website outlines these requirements in detail.
Can individual owners purchase additional insurance to cover the gap between personal and strata insurance?
Yes, there are specialized “gap” insurance products designed to cover areas where personal and strata insurance policies don’t overlap. The British Columbia Real Estate Association provides updates on this evolving situation.
Final Thoughts
Understanding your strata’s insurance policy, maintaining appropriate personal coverage, and taking preventative measures are essential steps in navigating this challenging insurance environment.
By working collectively through your strata council and individually as a unit owner, you can better manage the risks and costs associated with higher deductibles. Learning about leaky condos and other common strata issues can help you make informed decisions.
Want to know how your strata is doing? See how you compare with other stratas of a similar type and age.
Ask your property manager or sign up and run a free Eli Report to get a Special Levy Forecast that can help you plan for future expenses.