Bare Land Strata Insurance Appraisal: Who Insures What and For How Much
- Dan Wilson
- 19 minutes ago
- 6 min read
Building on our last post: from hidden infrastructure to insurance...
In our last post we looked at the hidden infrastructure under a bare land strata. Water and sewer lines, private roads, drainage systems and other common assets that most owners never see, yet rely on every day.
This follow up looks at the same property from a different angle. Insurance.
Who is supposed to insure what in a bare land strata, and how does a replacement cost or insurance appraisal help councils set realistic limits,
The goal is not to sell a policy. It is to give strata councils, property managers and owners a clearer picture of how the Strata Property Act, replacement cost valuations and depreciation reports fit together in a bare land context.
What the Strata Property Act requires for bare land stratas
In British Columbia, the Strata Property Act requires every strata corporation to obtain and maintain property insurance on:
common property
common assets
buildings shown on the strata plan
certain original fixtures installed by the owner developer on strata lots
This requirement applies to all strata corporations, including bare land developments with single family homes or townhouses.
In a bare land strata, the plan divides the land into strata lots. Common property is usually limited to the shared areas and systems that are not part of any lot. For example:
Internal roads and drive aisles
Sidewalks and pathways
Recreational facilities that do not fall within a lot
Underground services that serve more than one strata lot
Property coverage for bare land stratas often includes roadways, street lights, irrigation, sanitation and water systems, fencing, gates, docks and retaining walls where they form part of the common property or common assets.
Individual owners are normally responsible for insuring their own homes and improvements on their lots. However, if buildings such as houses are actually shown on the strata plan, the corporation may be required to insure them as well.
The only way to know the exact split in your development is to review the strata plan, bylaws and insurance policy with a qualified broker.
What a bare land strata insurance appraisal actually covers
A bare land strata insurance appraisal, sometimes called a replacement cost appraisal, estimates what it would cost to rebuild or replace the common property, common assets and any common buildings or structures the strata is responsible for, using current construction costs in the local market.
For a typical bare land strata, an insurance appraisal may address:
Underground water, sanitary and storm systems that are common property
Private internal roads, curbs, gutters and sidewalks
Streetlights, entry signs and common fencing
Clubhouses, utility buildings and gatehouses on the plan
Retaining walls and engineered structures that form part of the common assets
Other common facilities described in the bylaws or intended to be covered by the policy
In practice, many bare land stratas underestimate these values. Insurance appraisers and brokers often see missing or underinsured items such as underground site services, retaining walls and perimeter fencing.
A replacement cost appraisal does three things for council:
Provides a defensible estimate of full replacement value for insured common property and assets.
Helps your broker set appropriate policy limits and sub limits.
Creates a benchmark for future reviews as construction costs change.
It does not set market value, and it does not choose the insurer or deductible. It answers a simple question. If we had to rebuild what we are responsible for tomorrow, what would that realistically cost
How insurance appraisals and depreciation reports work together
For a bare land strata, the insurance appraisal and the depreciation report are two different tools that look at the same physical systems in different ways.
The insurance appraisal supports policy limits for sudden, accidental loss from insured perils. Fire, explosion, some water damage and other risks outlined in the policy wording.
The depreciation report supports long term planning for predictable renewal due to age and wear over a thirty year or longer horizon.
A few practical examples:
Private roads, curbs and gutters are insured as common property. Gradual wear and eventual resurfacing are handled through the reserve plan, not through an insurance claim.
Underground services are insured against sudden damage from covered events. Replacement at the end of their useful life is part of the depreciation report.
A clubhouse roof appears both as part of the building replacement cost in the insurance appraisal and as a future renewal project in the depreciation report.
When councils understand that both tools are looking at the same assets from different directions, it becomes easier to explain to owners why they need adequate insurance and a realistic reserve plan. Insurance responds when something goes wrong suddenly.
The reserve plan is there because everything ages.
Practical questions for bare land strata councils to ask
You do not need to be an insurance expert to improve your planning. You do need to ask clear questions.
Good starting questions for a bare land council include:
What property are we actually insuring as a strata corporation?
Can our broker list the common property, common assets and buildings the policy is intended to cover
Are our current limits based on a recent insurance appraisal?
If so, when was it last updated
If not, what was the basis for the current limits
How do our bylaws and our insurance policy line up for a bare land plan?
Do our bylaws require coverage beyond the minimum in the Act
Are there structures or improvements that sit in a grey area
How does this interact with our depreciation report?
Do the major insured roads, services and buildings appear in the reserve plan
Are we clear on which items are intended to be handled through reserves and which are expected to be insured losses
How are we communicating this to owners?
Do owners understand that they still need their own coverage in a bare land strata
Do they know how deductibles and chargebacks are handled under the bylaws
Clear answers to these questions improve governance and reduce surprises when something goes wrong.
Why clear insurance planning supports governance and resale value
Insurance and reserve planning can feel abstract until a loss occurs or a large project appears on the agenda. Buyers, lenders and insurers are looking for signs that the strata understands its physical systems and financial responsibilities.
For a bare land strata, strong planning shows up in several ways:
Policy limits that are supported by a recent insurance appraisal.
Depreciation reports that recognize the full cost of roads, underground services and other common assets.
Consistent communication with owners about who insures what and how large projects will be funded.
This combination increases confidence and reduces the risk of conflict when an incident or major project occurs.
The underground and out of sight systems we discussed in our previous article are not only a reserve planning question. They are a key part of the bare land strata’s insurance story as well.
Bare land strata insurance appraisal FAQs
Does a bare land strata have to insure underground services and roads?
Yes. The Strata Property Act requires every strata corporation to obtain and maintain property insurance on common property and common assets, as well as buildings shown on the strata plan and certain original fixtures.
In a bare land strata, common property and common assets typically include underground services that serve more than one lot, internal roads, sidewalks and shared recreational facilities.
The specific treatment of each item depends on the strata plan, bylaws and insurance policy wording.
What is a bare land strata insurance appraisal?
A bare land strata insurance appraisal, or replacement cost appraisal, estimates the cost to rebuild or replace the common property, common assets and any common buildings or structures the corporation is responsible for, using current construction costs in the local market.
It gives council and its broker a technical basis for setting policy limits to full replacement value rather than relying on rough estimates.
How often should a bare land strata update its insurance appraisal?
The Act does not set a specific update cycle. Industry practice in British Columbia often involves a full replacement cost review every three to five years, with interim checks in periods of rapid construction cost change.
Stratas in smaller or remote markets may consider more frequent reviews after major cost swings or significant upgrades.
How does an insurance appraisal relate to the depreciation report?
Both tools look at the same assets from different angles.
The insurance appraisal supports coverage limits for sudden, accidental loss. The depreciation report supports reserve contributions for predictable renewal over time. For example, road resurfacing and pipe replacement at the end of service life sit in the reserve plan, while sudden damage from a covered peril is an insurance matter.
What should owners insure in a bare land strata?
In a typical bare land strata, the corporation insures the common property, common assets and any buildings shown on the strata plan. Individual owners insure their own homes, contents, upgrades and personal liability. Owners should review the strata insurance certificate and bylaws with their broker to confirm how deductibles and chargebacks are handled.
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