“People living in stratas deserve to have peace of mind that their strata corporation has appropriate reserves to do routine maintenance and keep strata insurance costs down,” said Ravi Kahlon, Minister of Housing. “The overwhelming majority of stratas are doing just that, but a small number of strata corporations that are underfunding their contingency funds and putting owners at risk of surprise fee hikes and higher insurance costs. While the vast majority of strata corporations are already meeting these requirements, we’re ensuring that those outliers are taking steps to protect themselves.”

In 2020, BC introduced changes to the Strata Property Act to help stratas better manage strata insurance costs, including enabling these regulatory changes. Strata corporations in BC are required to have a contingency reserve fund (CRF) to pay for infrequent common expenses, such as maintenance work and emergencies. These new rules will increase the minimum amount that developers and strata corporations are required to contribute to a CRF, from 5% to at least 10% of the annual operating expenses every year. These changes will take effect on November 1st, 2023.

The new minimums were set with the advice of strata managers and homeowner representatives. According to strata industry experts, the vast majority of approximately 34,000 strata corporations in the province exceed this minimum amount and will not be affected by this change.

The Province is also enacting changes to the Form B Information Certificate. A summary of the strata corporation’s insurance coverage must be included in the form, effective April 1, 2023. This will make it easier for prospective buyers and strata owners to know whether the property is adequately insured, and the amount of insurance individual owners need to purchase.

Developers are required to include a CRF contribution in a new building’s interim budget, which under these changes will need to be equal to at least 10% of the operating expenses. This will prevent developers from advertising unrealistically low strata fees to prospective buyers and avoid unexpected increases in strata fees in the building’s first years.

For the small number of strata corporations that need to contribute more funds to their CRF to meet the new minimums, this will reduce their risk of strata insurance claims and premium increases, and significant special levies on short notice.

For the most part, this change will have impact to strata owners since most Strata Corporations are already meeting the 10% CRF contribution. That being said, for the Stratas that were underfunding their CRF, this may have an impact on monthly strata fees to boost up the minimum contribution to the CRF. In terms of insurance, the goal of the amendment is actually to reduce the likelihood of the need to use insurance. If proper maintenance is adhered to, the hope is that this will reduce claims linked to poor maintenance of properties. If insurance claims go down, insurance premiums normally are able to remain static without sizeable increases like we have been seeing in recent years. So, overall, the amendment by the province is a positive one for insurance.

At Leaders Insurance, we have a team of skilled brokers who help clients daily with finding the best rates for their home insurance needs. As a result, we have developed longstanding relationships with our clients for home insurance. We take the time to understand your needs and can help you as you find what is right for you. We look forward to assisting you with all of your insurance goals and requirements. Contact Us today.