Insurance Appraisals for Strata Corporations: Avoiding the Underinsurance Trap

Would your strata be able to rebuild tomorrow if disaster struck today?

It’s a question every property manager and strata council should be asking but most don’t. Why? Because many assume, “That’s what insurance is for.” Unfortunately, that assumption could leave your strata short by hundreds of thousands or even millions when it matters most.

At Jackson & Associates, we specialize in insurance appraisals and depreciation reports for strata corporations across Vancouver Island and Coastal British Columbia. We’ve seen firsthand how outdated or inaccurate replacement cost valuations can lead to financial shortfalls, council liability, and devastating special assessments.

This article explores:

• The real risks of underinsurance

• Why depreciation reports aren’t enough

• What a proper insurance appraisal must include

• A real case study where we uncovered a $1.8M shortfall

• How to protect your strata—before it’s too late

Underinsurance: The Hidden Risk Facing Strata Corporations

Underinsurance happens when your strata’s insurance policy covers less than the actual cost to rebuild the property. In the event of a fire, flood, or structural failure, that gap becomes a crisis.

Consequences include:

• Special assessments levied on owners

• Delays in reconstruction due to funding gaps

• Legal exposure for council members

• Owner frustration, reduced confidence, and potential lawsuits

According to a BC Financial Services Authority report, in 2021, Over 50% of B.C. strata buildings were underinsured in 2021—some by 25% or more. And that was before construction inflation, supply chain disruption, and labour shortages drove costs even higher.

What a Proper Insurance Appraisal Includes

Our strata insurance appraisals are insurer-ready, defensible, and compliant.

We include:

• Full reconstruction cost of the building(s)

• Demolition and debris removal allowances

• Professional fees (e.g. architecture, permitting, engineering)

• Regional construction cost modifiers (specific to Vancouver Island)

• Bylaw and building code upgrade allowances

• Exclusions clearly stated (land value, landscaping, etc.)

  
  

We tailor each report to meet the needs of:

• Strata councils

• Property managers

• Insurance brokers and underwriters

Real Case: A $1.8M Shortfall Caught Just in Time

We recently completed an insurance appraisal for a 22-unit strata on Vancouver Island. Their previous valuation was outdated and did not reflect the recent building envelope upgrades completed (new siding, windows, doors, flashings, etc.) and also omitted allowances for demolition, soft costs, and bylaw compliance.

Our recommended replacement cost: $13.2 million

Their insured amount: $11.4 million

Underinsured by: $1.8 million

Result: They updated coverage and avoided a potential underinsurance or co-insurance situation.

Why Strata Managers & Councils Trust Jackson & Associates

With over 45 years of experience in British Columbia, our team brings more than numbers we bring context, clarity, and protection.

What sets us apart:

• Region-specific construction cost data and contractor input

• Deep understanding of depreciation reporting and capital planning

• Reports crafted to insurer expectations—not just valuation theory

• Clear, readable documentation for councils and brokers

• AIC-designated appraisers and consistent leadership in professional standards

We don’t just produce a number—we explain how it’s calculated, what it covers,

and how to use it.

Final Thoughts: Make Insurance Part of Your Strata Governance Strategy

A strata council has a fiduciary duty to maintain accurate and defensible insurance coverage. That includes regularly updating the replacement cost appraisal.

If your appraisal is:

• Over 2 years old

• Missing allowances for code upgrades or demolition

• Based on updating or factoring an old report without a re-inspection

  
  

…your strata may already be underinsured.

Let’s fix that—before disaster strikes.

Let’s Talk

We offer:

• One-time insurance appraisals

• Three year valuation cycles with update letters in Years 2 and 3

• Bundled appraisals with depreciation reports

• Portfolio discounts for property managers

  
  

Contact us here to request a quote or schedule a discovery call.