Unit Owners — Do you have enough earthquake assessment coverage?
Although your strata corporation has earthquake coverage, you still need earthquake insurance under your individual unit owner policy. This coverage will protect your unit and contents and provide funds to cover a potential special assessment toward the strata corporation’s earthquake deductible. The trick is ensuring you have enough coverage!
How is the strata corporation’s earthquake deductible calculated?
Deductibles are a percentage — typically ranging 10% to 25% of the total property limit stated on the policy and not the amount of damage incurred. In some cases, deductibles may be higher depending on location and risk profile.
The strata’s earthquake deductible is a common expense. Owners are responsible for their portion through an assessment based on their individual unit entitlement.
How much earthquake deductible assessment do you need?
The formula is easy! See the calculation below:
Individual unit entitlement / Total unit entitlement x Total amount of earthquake deductible = Your portion
What if the deductible is $14 million, and the damage is $6 million?
As damage falls below the deductible, the strata’s insurance policy wouldn’t apply. However, each owner would still be responsible for their portion of the repairs.
Tip: Unit entitlement is provided upon move-in and included annually in the AGM package.
What documents do you need to calculate your share?
Applying the formula above requires accurate source information. To calculate your individual share of the strata's earthquake deductible, you will need two key documents.
The first is the strata corporation's current insurance policy, which shows the total insured replacement value of the building and the earthquake deductible expressed as a percentage.
The second is the Schedule of Unit Entitlement. For strata plans filed before July 1, 2000, this schedule is included directly on the strata plan. For plans filed on or after July 1, 2000, it appears as a separate document called the Form V: Schedule of Unit Entitlement. (Note: This article focuses on British Columbia strata corporations, where earthquake exposure is concentrated and the BC Strata Property Act governs unit entitlement schedules.)
Both documents should be available through your strata property manager or in the strata's document package. If the strata provides a pre-calculated table showing each unit's share of the earthquake deductible, review it against the formula to confirm accuracy. Deductible percentages and insured values can change at renewal, and the table may not always be updated in time.
Understanding earthquake deductible assessment coverage
Individual earthquake deductible assessment coverage is designed to reimburse unit owners for their share of a strata corporation's earthquake deductible levy. Without it, owners face paying that amount entirely out of pocket at a time when they may also be dealing with damage to their personal contents and temporary living expenses.
Coverage limits commonly range up to $250,000, though higher limits may be available depending on your building’s location and risk profile. The appropriate amount is determined by the building's total insured value, the applicable deductible percentage and the number of units sharing the assessment. Smaller buildings with fewer units generally require higher individual limits because the per-unit share is larger. Larger buildings spread the deductible across more owners, which reduces individual exposure but does not eliminate it.
This type of coverage is available either as a standalone policy or as an endorsement added to an existing strata unit owner policy. Premiums and terms vary between insurers, so comparing options with the help of a HUB advisor ensures you select coverage that reflects your building's actual deductible exposure rather than a generic estimate.
What happens if owners cannot pay?
When a strata corporation levies a special assessment to fund an earthquake deductible, every owner is legally obligated to pay their share. However, if a significant number of owners are unable or unwilling to meet that obligation, the strata corporation may lack sufficient funds to proceed with repairs or reconstruction.
This can delay rebuilding timelines, create legal disputes among owners and, in serious cases, leave a building in a state of disrepair for an extended period.
The collective nature of strata ownership means that one owner's unpreparedness can affect everyone in the building. Strata councils are encouraged to educate owners annually about the corporation's earthquake deductible and the importance of carrying adequate individual coverage. A building where all owners are properly insured is better positioned to recover quickly and completely following a major seismic event.
Disclaimer: This article is intended to provide readers with general information only. Readers are urged not to rely solely on the content of the bulletin but to consult with appropriate professionals on a case-by-case basis.