Are your homeowner insurance bylaws enforceable? Homeowner insurance bylaws may be deemed unenforceable for various reasons, such as conflicts with state or federal laws, infringement on homeowners’ rights, or if they are vague, inconsistently enforced, or not properly ratified. Understanding these factors is crucial for navigating homeowner association governance and ensuring compliance. Homeowner insurance bylaws are unenforceable due to the following 8 reasons:
No Interest: A strata corporation has no interest in the personal liabilities of an owner, resident or tenant, and cannot force owners to protect their personal liabilities.
Incomplete: Your bylaws only refer to owners, but what about occupants who are not owners, such as tenants or family members?
Liability: If the owners do buy homeowner insurance and provide a copy to the strata corporation, will the strata council review the policy to determine if the insurance is sufficient? Will they notify an owner if there is a defect, error or exemption in the homeowner policy? If the strata currently has a $25,000 deductible for water escape, and the homeowner policy only covers for $2,500 or no coverage at all, will the strata corporation notify the owner of the risk, or possibly assume the difference in the event the owner is responsible for a claim? What is the transfer of risk to the corporation if the strata does not advise the owner of a defect in their insurance as result?
Enforceability: What if the owner does not provide a copy of the insurance policy because of personal information that would place them at risk? If a resident is insuring for personal property such as an art collection, antiques, musical instruments, jewelry or collectibles, their personal security and property could be placed at risk if the policy was provided to the strata corporation and the privacy of the documents was breached.
Privacy: While a strata corporation must absolutely protect personal information, there are often few secrets.
Options: What if an owner chooses to self insure? The Strata Property Act and Regulations only sets mandatory insurance provisions for strata corporations and does not extend to owners’ personal property or personal liabilities.
Advice: Your strata corporation may want to confirm your legal advice. It is common to see bylaws that “advise” owners, tenants and occupants maintain homeowner insurance for their potential personal liability and property risks.
Real Obligation: The strata has an obligation to report on insurance at the AGM, and it is essential for the strata corporation to provide a written notice to owners, occupants and tenants along with the policy summary, highlighting the deductibles for water escape, earthquake and other perils. When the policy renews, immediately provide a copy to all of the parties so they may take immediate action to adjust their homeowner/ tenant policies to reflect the changes and increased risks or exemptions. Keeping owners informed and educated will result in fewer conflicts and surprises.
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