Insurance

What’s presented at our AGM is held out as the insurance policy, but it’s just a summary of coverage.

⁠In fine print at the bottom of the last page it says, "This record sheet is intended for reference only. Please refer to your polic(ies) for complete details."

⁠After making s.36 requests to the strata since 2003 to no avail, I finally received our full insurance contract directly from BFL by specifically quoting and requesting every item referred to in the summary that was provided at the AGM. That contract contains 150 pages of policies.

⁠I haven't done it yet, but I intend to ask for a copy of our strata's history of claims also.

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What’s REALLY going on with strata insurance? How much does anybody know?

The hard market arising out of catastrophic wildfires, floods, hurricanes, and other environmental disasters associated with global climate change makes sense to me. The financial impact of trip cancellations, bankruptcies, disabilities, and worldwide deaths associated with the Covid-19 pandemic makes sense also. What doesn’t make sense is stratas bearing the cost so disproportionately.

An economic analysis of the stated reasons for targeting stratas with astronomical premiums and deductibles makes no sense in comparison to premiums and deductibles for commercially owned residential hi rises and apartment blocks not governed by the SPA. Why are rental buildings less risky than strata? In addition to that, nondisclosure of the “best terms pricing” practice and kick back commissions raise apprehensions of anything but good faith.

At first I thought the insurance industry was just exploiting stratas because s.149 of the SPA makes strata insurance mandatory no matter how insane the premiums and deductibles are. Then I considered the matter of pay back against stratas for a history of shirking depreciation reports, repairs, and maintenance, just waiting for things to break and then provoking litigation to offload common expenses onto insurers via defence policies. Then I thought it could be a business decision to collect premiums twice on the same property by raising deductibles high enough to induce owners to double up with personal insurance.

I’m not good at math. Maybe that’s why it took me so long to realize that high deductibles that induce owners to buy parallel coverage does not equate to collecting premiums twice on the same property. There are 68 units in my strata, and if each owner buys a policy to offset the strata’s $25k deductible, that’s collecting 68 times more premiums than would be collected on the strata’s policy for the same $25k coverage. I’ll let readers do the math for their own stratas.

Reviewing the math even further, water that escapes from a broken pipe and damages multiple units is a single incident and a single deductible under the strata's insurance. By conflating the strata's s.149 responsibility to insure strata lots for full replacement value with the strata lot owner's s.72 responsibility for routine repairs and maintenance, insurance companies are not only effectively multiplying the premiums they collect, they are effectively multiplying the deductibles that reduce the payments that they make also.

When that money is multiplied by the number of existing stratas, it shows how astronomically high the stakes are in manipulating strata deductibles. All of it contrary to the SPA and SPR, and all of it contrary to the best interests of stratas and owners.

Anyone who owns a strata will do themselves a favour by downloading the SPA and SPR from BC Laws and adding the Table of Contents to their Favorites for quick and easy reference. These enactments are not guidelines, they are the law. 

When reading Part 9 of both the Act and the Regulations it is important to realize that every word has meaning, in context with the whole. It is important to see the difference between s.72 repairs, which are routine maintenance, and s.149 repairs, which are due to sudden damage and replace the strata lot's drywall, paint, doors, and floor coverings, for example. According to my understanding of Hansard, the SPA was written in plain language for consumer protection. What's happening to that is beyond belief.

Another thing. Our property tax assessment shows the depreciated value of our 1987 townhouse is less than $100k, but it’s insured for 4 times that much at full replacement value, even though a $25k deductible on a $100k property is anything but full replacement value. It churns up litigation when a personal insurer won't cover that amount, and of course, that in itself is enough to get the lawyers on board, in what looks to me more like a conspiracy than anything else.

Insurance reps and CHOA's Tony G seem to be trying to sweep misrepresentations about deductibles under the carpet by saying that it’s “academic” because unit holder insurance will cover that amount, no matter who is responsible.

I couldn’t understand why any owner's insurer would pay the strata's deductible when the SPA requires a court order to hold an owner responsible. It seems that since the various insurers are pretty much all the same companies wearing different hats for different clients and policies, perverse payments of deductibles look like a loss leader. It's a small price to perpetuate 68 times more in premiums and deductibles on an ongoing basis.

In view of the surrounding support and inherent conflict of interest that naturally exists in all agency relationships, it might be no wonder that the SPA is being misrepresented by the insurance industry to deter owners from making claims and induce them to pay more premiums and deductibles.

I can see how the foreseeable profit from insurance litigation influences the legal profession, land assembly potential influences developers and property managers who are realtors, and professional courtesy influences adjudicators for the Civil Resolution Tribunal.

I cannot, however, see what is influencing the Condominium Homeowner's Association, strata council, or owners to support this atrocity.  What's up with that?

I'm not a psychologist, so I’m left wondering what made so many owners of strata property “drink the Kool Aid” and turn against the law, and each other, in support of industries that have absolutely no duty under the SPA to act in the best interests of stratas or owners. I'm astounded by how many owners do not see what’s going on or act to stop it.

Anybody else care to weigh in on this issue?

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Thank you for sharing your insight. What you are saying makes total sense.

I have no argument with the dichotomy between depreciation and inflation, or building values and land values. My argument is with the dichotomy between the prevailing trend to conflate s.72 with s.149 to offload the strata's common expense for deductibles onto innocent individual owners contrary to law.

I think the insurance industry is the beneficiary of that, not the strata, or the owners. The cost to owners is sky high and continually compounding. To me it's nothing short of scandalous.

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I didn't think of any of that, but now that you mention it, it rings so true that it makes me feel sick.

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The earthquake deductible went up to 15% of what? The whole building? Or the whole property? You might want to check that, very carefully...

In theory, there might be no problem with ignoring s.149, until you experience a catastrophic loss and lose your home, or maybe everything if any neighbours were to sue for negligence.

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It sounds like best terms pricing, which has just been outlawed. How are deductibles that high in the best interests of the strata, or for the benefit of the owners? It sounds significantly unfair, and the antithesis of full replacement value coverage.

Since the deductible is a common expense, I wouldn't pay that much for the extra $50k. Particularly for sewer. That's just my own risk management practice of course. I would rather self insure for that much while I rally the troops to get council to reduce the deductibles to a level more in keeping with s.31 and s.149.

You're in a high rise. How could you be responsible for the sewer? Cat litter down the toilet? Is that sewer or water? I don't know. How do they trace the source in stacked units? I don't know.

Do you? Should I be more worried?

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Our earthquake deductible is 5%, of what I don't know, but I suspect that it is the value of the entire complex, including the common property, which is on a 5.5 acre site valued at over 5x the buildings.

You are in a newer high rise on less land, so 15% seems consistent with my method of calculating. I got the heads up on this in a webinar. Unfortunately I don't remember the specifics, just that it was a warning, and most people never check until it's too late.

I really should try to dig out that 120 page strata policy and read it sometime.

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Thanks to you I've just now asked for answers from them, with a copy to the Attorney General, Minister of Housing, Consumer Protection, and Post Media. Not holding my breath for results, just doing whatever I can.

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CC: imulgrew@postmedia.com, aodaliaison@postmedia.com, vantips@postmedia.com, iibcmail@insuranceinstitute.ca,  Office of the Ombudsperson <outreach@bcombudsperson.ca>; professionalconduct@lsbc.org <professionalconduct@lsbc.org>; Recbc Info <info@recbc.ca>; AG AG:EX Minister <ag.minister@gov.bc.ca>; Office PREM:EX OfficeofthePremier <premier@gov.bc.ca>; MAH MAH:EX Minister <mah.minister@gov.bc.ca>; Choa Bc Info <info@choa.bc.ca>; VISOA Membership <membership@visoa.bc.ca>; Canadian Condominium Institute (CCI) - Vancouver Chapter <socialmedia@ccivancouver.ca>; lawmatters@courthouselibrary.ca <lawmatters@courthouselibrary.ca>; Salter Shannon CRT:EX <shannon.salter@crtbc.ca>; Richard G. CRT:EX Rogers <richard.rogers@crtbc.ca>; Kevin Zakreski <kzakreski@bcli.org>

Sent: Wednesday, April 21, 2021, 06:42:41 p.m. PDT

Subject: Re: Strata Insurance Deductible

As I said I would in my earlier reply, I talked to Roman at the Court House Library this afternoon. From what he told me it’s my understanding that a claim is defined in the texts about property insurance as “a formal report with a request for payment.”

Based on the above, reporting a loss to the strata's insurer is not the same as a making a claim. To make a claim and be entitled to a claim number an owner must make the report as required by the policy, and also request payment as required by the SPA. It is making both of those requests that “triggers” the broker’s duty to provide a claim number under the strata policy. Repairs that exceed the deductible trigger a payment under the policy, but a claim and a payment are not the same thing.

The innocent owner bears the responsibility to report the loss and request payment, and whether said payment comes from the insurer, strata fees, a special levy, or a court order does not seem to be any of the owner’s business under the strata’s insurance policy or the SPA. Nothing makes such payments or deductibles the innocent claimant’s responsibility.

Also, even though ICBC issues a claim number when you report a motor vehicle accident, Roman said he found a reference to a claim being “a third party demand for compensation,” which I understand is consistent with liability insurance, not property insurance, and conflating unrelated matters creates confusion and conflict.

For consumer protection, strata owners have to be able to rely on the minimum protections provided by the SPA as written. We cannot bear the burden of the insurance industry's hard market, or the hidden agenda of any other industry either.

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Stratas are already self insuring for their deductible amounts and trying to get owners to reimburse them, almost like making subrogation claims, from what I can tell.

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Please read s.158 of the SPA and stop thinking that you're responsible to repair the walls opened up, "as it is below the building's insurance deductible."

BTW, who told you that you're responsible to repair the walls? The council? What makes you trust that information? The bylaws? Did you read a "subject to the SPA" clause in the preamble? Did you read that? I'm sorry if I sound frustrated, but I've been living with unrepaired water damage from the unit above me ever since that owner let the strata's insurance lapse in 2003!

Did you read the definitions of common expenses and common property in s.1 of the SPA? Did you read the strata lot boundaries in s. 68? Did you read about unenforceable bylaws in s.121? Most important, did you read Part 9? Did you read the corresponding Regulation?

In all justice and fairness, what are you actually responsible for? Who is "responsible" for the common property? Did the source of the leak come from the building envelope, or from your strata lot? Did you have any power or control over the source of the leak or the conduct of council? Did you open the walls, or did you ask the strata to open the walls, or did you give reasonably informed consent for the strata to open the walls without fixing the damage that caused?

Are you aware that you are a named insured under the strata policy, and that there is a clock ticking on the time you have to report the loss and get a claim number from the strata's insurer shown in the AGM minutes? Have you made a s.36 request to council for a copy of the full insurance contract?

What makes it seem fair or just for you to be responsible for damage flowing from common property, the repair and maintenance of which is the responsibility of the strata and completely beyond your control?

What makes you think you are responsible for the deductible which is a common expense covered by an automatic special levy to insure full replacement value coverage? What makes you think the strata can offload common expenses onto you without suing to prove you're responsible for a leak from the common property? What makes you think council can offload its duty to repair damage from an insured peril without a 3/4 vote under s.159?

Are you keeping a paper trail and photos/videos to "prove" everything you claim to the CRT?

TICK TOCK...

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In 2002 my strata's deductible for water damage was $1,000, then in 2003 when a claim was made it was $2,500 with an annual premium of $13,700 for a 68 unit townhouse complex in Coquitlam. Now the annual premium is $97,000 for the same complex with a $25,000 deductible for water damage.

Thanks to strata management, our property value after special levies of nearly 6 million dollars for building envelope repairs in 2005 is now two and a half times higher than it was in 2003, the strata's insurance premium is more than 7 times higher, and the deductible for water damage is more than 10 times higher.

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I'm sharing the following letter to my strata's insurer in case some members might be interested in writing anything similar.

June 28, 2020

BFL Canada Insurance Services Inc.
9440—202nd Street, Suite 100
Langley BC V1M 4A6

Via Fax: 604-683-9316

Re: Policy Number BFL04NW02671

I am insured under the above mentioned policy and am acting on my own behalf as the registered owner of a unit in Strata Plan NW2671.

I am in receipt of your Summary of Coverages and Insuring Agreement for the period May 01, 2020 to May 01, 2021, but the instructions in that 2-page record advise me that the information is intended for reference only and that I should refer to Policy BFL04NW02671 for complete details.

In view of this year's extraordinary increase in premiums and deductibles, please email me at my address above full disclosure and complete details regarding Policy BFL04NW02671, including in particular, but not limited to, the full policy, with the wording, riders, endorsements, cover, sections, forms, definitions, master wording enumerated in the List of Insurers, and, without inadvertent duplication, full details, including costs, of everything specified below:

1. the amounts of related commissions and fees and who they were paid to

2. BFL Manuscript(s) for Blanket Coverage, Excess Property, Earthquake Deductible, and Environmental Liability

3. BM31V2: Standard Comprehensive Form, including Electronic Equipment, Direct Damage, Repair or Replacement, Bylaws

4. BM33 Loss of Profits - Rents, Indemnity Period

5. BM34 Extra Expenses, including living expenses

6. Form(s) AGCS-PM 1001 Canada 12-17 for Crime, Commercial General Liability, and anything else that's covered

7. Form A - Employee Dishonesty - Including Property Manager and Elected Officer Theft

8. Form DS 1100C(07/13) for Condominium Directors and Officers Liability

9. Claims Made Form - Including Property Manager

10. Form ACE GI-IC-0397 for Volunteer Accident

11. Form LMA 3092 (Amended) for Terrorism

12. Tenant's Legal Liability (Broad Form)

13. Contractual Liability Endorsement SEF #96

14. Employee Benefit Liability (Form Number V 1.2 - 201503)

15. Sudden and Accidental Pollution Endorsement (Form AGCS-PML-E-CGL0014-PKG0001 CANADA 14-16)

16. Form 2294 (03/2010) for Blanket Glass

17. "Insurance Claim Report" form for glass

18. "Insurance Claim Report Form" for property claims other than glass

19. "Proof of Loss" requirements to expedite claims

20. "Legal Protection Insurance Policy" for any years covered, past or present

If you have any questions or concerns, or require anything further, please let me know without delay. I look forward to a response at your earliest opportunity.

Thank you.

DS Bond
cc The Owners, Strata Plan NW2671, c/o Fraser Property Management Realty Services Ltd.
Barry F. Lorenzetti, BFL President, CEO and Founder via fax to 1 514 843-3842

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INSURANCE CONSPIRACY

Dear Strata Owners:

PLEASE STOP letting lawyers, insurers, property managers, strata councils, the CRT, or CHOA confuse the strata's bylaws or s.72 duty to repair with it's Part 9 duty to insure strata lots and fixtures at full replacement value.

When Stratawest owned by the CRT's Garth Cambrey was our PMC the structural damage to our strata lot from a flood in the unit above in 2003 was not reported to the insurer, and the repairs the strata started were never completed. This is just one of thousands of examples of the BS that has been leaving strata buildings in BC increasingly dilapidated over time. It is no wonder that insurers finally got sick and tired of stratas interfering with, delaying, or offloading repairs, and thwarting statutory obligations.

The strata corporation is not the insurER - the strata is the insurED, and so are the owners. The amount of the deductible is NOT a self-insured retention; if an owner makes a claim on the strata's insurance, the insurer must pay the claim and seek reimbursement of the deductible from the strata. The strata, not the owner, is responsible for reimbursing the insurer for the deductible. Then, the strata must prove to a court that an owner was responsible for the loss if it wants to chargeback anything to an owner's account.

Please put a stop to the insanity.

Thank you.

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For what it's worth, I'm sharing my June 29, 2020 notes from the BC Liberal Caucus Virtual Town Hall on B.C.’s Strata Insurance Crisis, which ended with an Invitation to owners to email bcliberalcaucus@leg.bc.ca with more on the subject, as further debate is expected following the second reading of Bill 14 next week.

The strata insurance industry uses best price bids, which means the highest bid gets the contract, the broker gets a 20% commission, and the province gets a 4.6% tax.

WOW!! What's not to like about that?

Changes to the Building Code are needed. Stopping the insurance industry from exploiting mandatory coverage with price gouging is most important. Changes to the Strata Property Act is a waste of time until CRT adjudicators stop perverting it to defer to strata councils shirking statutory obligations.

Why is nobody comparing strata premiums to commercial rental buildings, older houses, or other jurisdictions?

Property values of our 68 unit Coquitlam townhouse are 2.5 times higher today than in 2003, and that is after nearly 6 million in special levies in 2005 to pay for building envelope repairs. Premiums are 7 times higher and deductible is 10 times higher during the same period for the same property.

The building, insurance, and legal industries all keep profiting on the backs of strata owners, who have already been hit by leaky condos due to unreasonable building codes allowing the building industry to profit from its own wrongs.. Stop it please.

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Todd Stone, MLA for Kamloops-South Thompson, currently serves as the Official Opposition Critic for Municipal Affairs, Housing and TransLink and is a Member of the Select Standing Committee on Legislative Initiatives. He says that after 2nd reading of Bill 14 next week, further debate is expected.

Personally, I don't like moves to change the SPA to require stratas to arrange renewals 30 days in advance, provide proof of insurance, and owners to have their own liability insurance. In my opinion, all of that only acts to ensure that the industry and govenment profit even more on the backs of strata owners.

It is clear to me that the predominant reason for the strata insurance increases is STATUTORY MANDATES to insure that are unique to stratas, leaving insurers free to offload the costs of global wildfires, floods, and other environmental disasters onto owners of strata property. The rest of the reasons are more noise than anything particularly unique to strata corporations.

Legislation that stops the insurance industry from price gouging owners of strata property is required immediately, so it seems strange to me that nobody talked about that. Of course, I was not the moderator.

Immediate changes to the Building Code are needed to require drains that do not place other units in jeopardy. Unlike the leaky condo fiasco, legislation should require the provincial government to compensate owners for delaying the required legislation and reimburse the tax it's collecting on strata insurance also.

Immediate changes to the Strata Property Act (the SPA) that owners (as opposed to industry) actually need are requirements for higher CRFs, mandatory depreciation reports, braided hoses, and scheduled maintenance. More importantly, CRT adjudicators must be made to stop perverting the SPA to defer to strata councils who are shirking statutory repair obligations or acting unlawfully - because without effective enforcement changes to the SPA are next to useless, or even worse.

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The plain language of the SPA says major perils include water escape, PERIOD. If the intention was to limit that, or to exclude water escaping from dishwashers, toilets, or other fixtures, the statute would explicitly say so.

The only thing that has complicated the SPA is a deliberate conspiracy to confuse, manufactured by those who wish to write limits and exclusions into the SPA to suit their own agenda, contrary to the benefit of the owners or the best interests of strata corporations. What's happening now as a result of that was predictable. The writing has been on the wall for years.

Earthquake insurance is optional, so if council exercises their discretion to include it, that part doesn't have to be at full replacement value, but all of the major perils mandated by the SPA for full replacement still do, and the deductible is a common expense.

If the statute changes in regard to full replacement value or the common expense, then owners will be in even bigger trouble than ever before.

I understand from NAME that after the quake in San Francisco in the early 90s owners found themselves fighting in court for more than a decade. The earthquake insurance just seemed to guarantee court battles, and we all know who wins then. In that regard, I think the only sensible way to purchase earthquake insurance is through the strata, effectively making the foreseeable court battle a mini class action. Fighting alone, owners won't stand a chance, in my opinon.

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The SPA ensures that stratas cannot avoid full replacement value insurance via deductible amounts by making the deductible a common expense in s.158, payable by a special levy without the normal vote of approval.

Just read all of Part 9 as well as the Regulation, and note that nothing allows the strata to offload its s.72 responsibility to repair and maintain common property or to enforce bylaws that conflict with the SPA.

Fortunately, BC's legislature wrote the SPA in very plain language. Unfortunately, there's a long history of conspiracy to thwart the SPA to suit lawyers, insurers, property managers, and council members acting in conflict with s.3 benefit of the owners, particularly with respect to Part 9.

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I think that if the statute we have was enforced, as written, instead of being twisted by crafty lawyers and erroneous case law, strata owners would benefit enormously.

eg. strata is managed by COUNCIL; their decisions MUST be in minutes; AGMs must be chaired by an OWNER, s35 records MUST be provided, insurance must be FULL replacement value, the DEDUCTIBLE amount is a COMMON expense, common property MUST be repaired and maintained by strata, exclusive use must be SHORT term, etc, etc...

New laws won't be much help if owners don't act to enforce them at home, and lawyers and courts don't respect them better, MUCH better. Nominating committees, social media and public opinion may be the most effective path to justice, as well as AGGRESSIVE use of CRT combined with follow up reporting. Especially if this group provided free legal advice to members as allowed under the law.

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Under the strata's insurance you are a named insured, personally. Water escape is a "major peril" to your strata lot that must be repaired to full replacement value. Read Part 9 of the Strata Property Act and the Regulation.

The name of the insurer should be in your AGM notice or minutes. Unless the time to report a loss has expired (probably 1 year) I would make a claim for full replacement value repairs and have the strata pay the deductible. It's a common expense covered by your strata fees no matter what the comparative dollar amounts are.

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That is why owners must IMMEDIATELY report even the smallest damage from water escape to the strata's insurance broker for full replacement value repairs, right before reporting the loss to everyone else. No matter how high it is, the deductible is a common expense.

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If the time to report the loss to the strata's insurer has expired your other option may be to make a claim for vandalism. Unless you gave permission to enter your unit to put a hole in your ceiling as opposed to make repairs.

If you gave permission, you may still be able to make a claim for damages under negligence law. The strata is not an insurer, but it does owe a duty to provide full replacement insurance and to repair the structure of the building and not cause foreseeable harm to an individual in doing so.

Although the strata management team is acting to induce to you believe otherwise, the Strata Property Act does not deprive owners of their common law rights; to the contrary, it is evidence of a minimum standard of care.

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