Strata Corporations must review their building insurance yearly

Dear Condo Smarts: We live in a nice 46-unit condo apartment building. Last year we had a major fire that destroyed six of our homes. The repairs to our units have now been completed and the insurance claims are being settled. To our dismay, we have been advised that we have been underinsured for more than 10 years. We have not had new appraisals and the strata, as a result, will be left with a debt of more than $100,000 as a result of the conditions of our insurance.Can we not recover these amounts from anyone ? Do we, the owners, have to pay this ?

-- Ms. L Winters

Dear Ms. Winters: You are not the first strata to discover they are underinsured and faced with a large claim. Some, unfortunately, have been much larger. There are two important pieces of information to be considered. First, the act requires that the strata must be insured for full replacement value. That means that you must have routine appraisals provided for your insurer to asses your true insurance values and needs.

Second, it is the responsibility of those insured to guarantee they have met the conditions of their insurance policy. Some strata owners have tried to blame their councils, managers or brokers for neglecting the requirements, and while some responsibility may be on their shoulders, it is still the strata owners who have this ultimate responsibility.

In an under-insurance scenario, there may be little anyone can do but pay their share of the cost. The prospect of legal action can be costly with minimal results, but I would recommend that the council review the circumstances with their lawyer before making any such decisions. Each homeowner's insurance may carry coverage, too, so that should be reviewed closely as well.

Strata homeowners should review their policies closely every year. Confirm in writing with your insurer that your policy is current and get updated information for homeowners' policies to cover possible losses.

Tony Gioventu is the executive director of the Condominium Home Owners Association (CHOA). Contact CHOA at 604-584-2462 or toll-free 1-877-353-2462, fax 604-515-9643 or e-mail [email protected]

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