What Does Strata Insurance Cover?
In our last article we discussed what a Strata corporation is, and why they are formed. Today, we are going to chat about the insurance that this entity must carry, what’s inside this policy, and how it directly affects unit owners.
Here you see a sample declaration page outlining the strata’s coverages. Note the blue highlights the top line building coverage, and the yellow showcases the endorsements and their respective deductibles.
Much like any other corporation or business operating in today’s environment, insurance plays a key part of the risk management strategy for stratas. Since this revenue-generating entity has everything a normal company would have, such as a board of directors to a financial controller, it’s important that they have the necessary coverage in place to protect its assets and liability risks. Most of the time, all the coverages are put together to form what we call in the business the ‘master policy’.
There are coverage items that the strata corporation will have that don’t necessarily (directly) affect the individual unit owners, such as directors’ and officers’ insurance for the board, while others have a direct impact, like the building value, and its associated deductibles.
As an individual unit owner, there will be a lot of ‘fluff’ inside the policy, so you’ll want to focus on the items that really matter – the important coverages and their associated deductibles.
When we talk about the ‘important’ coverages, we mean three items in particular:
1. The total building value – a good policy will be on a replacement cost basis and will have 90%-100% co-insurance clause (which means the insurer will pay 90-100% of the loss up to that value). See blue highlights in the picture.
2. Endorsements – there are three main items that should be disclosed on the declaration page that should be showcased: earthquake, flood, sewer back-up, and water damage. See yellow highlights in the picture.
3. Deductibles – as a unit owner, you can be responsible for paying a deductible on the master policy, so you need to make sure that your condo policy covers these deductibles, and that they are between 10k-100k. Again, see the yellow highlights in the picture.
If you are a condo owner and you are concerned about your strata’s policy, or you want to make sure your own personal policy covers the necessary risk points, give Alteri a shout and we will be happy to help!
Alteri. The insurance people.