Living in beautiful British Columbia comes with its perks—stunning views, vibrant communities, and yes, the occasional rumble underfoot. Living in a region within the Cascadia subduction zone, earthquake insurance is a critical consideration for condo owners in British Columbia. For BC condo owners, understanding and addressing this risk is not just prudent—it’s essential for safeguarding homes and investments.
While a regular insurance policy might cover everyday mishaps, it usually skips over earthquake damage, leaving owners financially vulnerable in the event of a major quake. Earthquake insurance covers loss and damage to both the condo unit and personal property due to an earthquake, as well as coverage for out of pocket living expenses following an earthquake.
Condo owners also face unique risks associated with owning a piece of property in a building with other people. This is where Loss Assessment coverage comes in!
What is Loss Assessment Coverage?
Loss assessment coverage is an insurance provision designed for condo or strata owners to help cover their share of costs when the condominium corporation’s or strata’s insurance is insufficient. It typically applies to:
- Shared Property Damage: If an earthquake or other event damages shared areas like roofs, lobbies, or hallways, and the strata’s insurance doesn’t fully cover the repair costs, loss assessment coverage helps pay your portion of the shortfall.
- Strata Insurance Deductibles: Owners may be assessed a share of the deductible, which this coverage can help pay.
- Legal or Liability Claims: If the strata is sued and the cost exceeds its liability insurance, unit owners could be asked to contribute, and loss assessment coverage can assist.
Loss assessment coverage helps protect condo owners from significant unexpected costs, providing both piece of mind and financial protection.
It’s important to note, loss assessment coverage will not apply to any assessments that are not considered a covered loss under your condo unit owners’ insurance.
How Much Loss Assessment Coverage is Enough?
Knowing how much loss assessment coverage is enough depends on several factors, including a person’s financial situation and the strata they live in. A few things to consider:
- Strata Policy Limits and Deductibles: Review the strata insurance policy coverage limits and deductibles. Know the deductible amounts and ensure the strata insurance coverage is adequate to cover current rebuilding costs.
- Review Past Assessments: Understanding past assessments allows unit owners to estimate for potential future loss assessments.
- Evaluate Potential Risks: Evaluate the types of amenities and common areas around the building or complex. What would it cost to repair these areas in the event of a loss?
Unit owners with additional questions about their strata coverage should refer to their AGM package to find their unit allotment and consult their strata council or property manager for confirmation.
Earthquake Deductibles
Earthquake insurance carries a separate deductible that is often much higher than the standard policy deductible and is typically applied as a percentage of the insured values.
Example:
Strata’s Current Insured Property Value: $10,000,000 (entire building)
Earthquake Deductible: 15%
Strata Earthquake Deductible: $1,500,000
Number of Unit Owners: 30
Potential Loss Assessment per Unit Owner: $50,000
It is important for condo owners to understand how their strata deductible is applied in the event of a loss as not all unit owners may be assessed equal amounts.
Earthquake Deductible Loss Assessment Limits
Due to the severity of earthquake losses, many insurance companies limit the amount they will pay for earthquake deductible loss assessments to a maximum of $25,000.
Seafirst recognizes that without adequate limits to cover unexpected loss assessments, owners’ risk significant financial exposure in the aftermath of an earthquake. Effective January 1, 2025, we are now able to offer options for Increased Earthquake Deductible Loss Assessment limits of up to $100,000.
Our knowledgeable Insurance Advisors are happy to discuss your current coverage needs.
