Reviewed by Stefan Tirschler
Updated September 27, 2022
By·law | ˈbī-ˌlȯ
Definition: A regulation created by a local authority or an organization to govern the affairs of that locale or organization.
Her home insurance policy includes bylaw coverage if she needs to rebuild her house.
A bylaw (or by-law) is a rule created by a community or organization that only applies to itself. Towns, businesses, or condominium corporations all have their own bylaws.
Bylaws are a way for organizations to partially customize laws to suit their unique needs. Bylaws can’t erase or contradict provincial or federal law; they can (usually) only add to them. There are some exceptions, but that’s generally how it works in Canada.
When someone breaks a bylaw, the punishment is usually a fine. In extreme cases, though, bylaw-breakers can face imprisonment.
Many types of organizations and communities have bylaws, but where home insurance is concerned, it’s municipal bylaws and condominium bylaws that matter.
Municipal bylaws are local rules set by individual communities (towns, cities, villages, etc.). Though they differ from town to town, municipal bylaws usually address the same issues.
Most towns have bylaws to cover things like:
You can usually find a list of your local bylaws on your community’s official website. Municipal bylaws can be broad (setting building codes for every structure in the city) or narrow (governing the sale and possession of shark fins).
The word “bylaw” comes from the Old Norse “Bȳlǫg,” which roughly means “town law.”.
Land use bylaws are particularly important for homeowners. Even if you own a piece of property outright, you’re still limited by the local bylaws as to what you can do with it.
Roberta just bought an empty lot across town. At first, she wanted to use the lot to build a new workshop for her woodworking business. Unfortunately, the local bylaws have the neighbourhood zoned for residential use only.
She decided to buy the lot anyway and build a house. She has all kinds of plans, but she’s surprised to learn that the town has some strict building code bylaws for that neighbourhood: her new house can’t have a second story, has to be a set distance from the street, has to have walls of a certain thickness… the list goes on.
Even though Roberta owns her property, she doesn’t have unrestricted use of it; she still needs to obey the law, and bylaws are the law. In this case, the local building codes and land use bylaws dictate what she’s allowed to build on the property and set some ground rules for the building itself.
Fortunately, municipal bylaws like building codes aren’t totally inflexible. You can sometimes apply for exemptions to certain bylaws. In Roberta’s case, the town might grant her a building permit that allows a second story if she has a good reason for it.
If you live in a condominium (a.k.a. strata) building, you’re probably already familiar with condo bylaws.
Condominium bylaws are set for each condo corporation. Condo bylaws set out the regulations for people in the building, including owners, renters, and visitors. These bylaws cover things like:
Though each condo building sets its own bylaws, they usually don’t differ too much. Provincial law regulates condos in Canada, so any bylaws need to follow the law in their home province. Some provinces, like BC, even have standard condo bylaws. Condo corporations can change the standard bylaws to suit their needs, as long as they’re still following the province’s Strata Property Act.
Changing condo bylaws usually requires a majority vote by the building’s owners (sometimes a supermajority of two-thirds or higher).
If someone breaks a bylaw, the condo board will fine them (though they might get a warning first).
Sometimes, condo bylaws stipulate that all owners in the building have condo owner’s insurance (which they should have even if it’s not required).
Condos also have a smaller version of bylaws, which are called rules.
Condo rules are like bylaws but tend to be smaller in scope and easier to implement. Rules are things like “keep your dog on a leash in public spaces” or “don’t put your trash next to the parkade entrance.” They can’t dictate how the owners use their units; only bylaws can do that.
Some buildings let their board add rules without an owner vote. Rules are also enforced with fines, but the fines are much smaller than the fines for breaking bylaws.
Bylaws are like a subset of laws. Bylaws add to laws but can’t remove laws. Roughly speaking, a law in Canada is something that comes from specific constitutional power and a bylaw is something that does not.
Think of laws in Canada like a hierarchy:
At the top, you have federal laws. The Canadian constitution gives the federal government power to make laws about things like currency, foreign affairs, national defense, and so on. These laws affect the whole country.
Then, they pass the baton to provincial governments to figure out things like health care, education, property rights, and more. The constitution also covers this part. Each province sets laws that apply only to themselves; BC can’t pass laws that apply to Alberta, nor can they pass any laws that cancel out the federal laws.
After the provincial government finishes, they had things down to municipal governments. Since the constitution doesn’t set municipal powers, here we stop calling them laws and start calling them bylaws. Each province decides what powers its towns and cities have to set their own bylaws, and the municipalities must abide.
Everything lower on the hierarchy from here is also called a bylaw: condominium bylaws, corporate bylaws, and so on.
As mentioned earlier, municipal bylaws can influence the construction of your home. When bylaws change over time, a home that was once up to local building codes may no longer be so. Bylaw insurance covers the extra expenses involved in building or repairing a home in compliance with new bylaws.
Normally, new bylaws don’t affect homes that already exist. New bylaws only apply to homes built after the bylaw comes into effect. Existing homes are “grandfathered,” meaning they’re allowed to keep existing under the old rules for the rest of their life.
However, if a house is damaged or destroyed, the rebuilt home needs to follow any bylaws that came into effect since the original home was constructed. Modern homes must meet specific guidelines for safety, energy efficiency, and other categories that old homes weren’t worried about. Meeting these guidelines means extra costs.
Home insurance policies usually insure homes for the estimated cost of rebuilding the same house in the same place. But, following new bylaws usually means upgrading parts of the original house, making it more expensive. Bylaw insurance coverage means that your policy will also pay for the extra costs associated with bylaw compliance.
Some bylaws also mandate you can’t repair a home that suffers a certain amount of damage — you need to rebuild it. Bylaw insurance coverage can help with that, too.
Many home insurance policies include a small amount of bylaw coverage by default. Policies sold by Square One include unlimited bylaw coverage automatically, as long as they’re insured for the recommended replacement cost.
Looking for another insurance definition? Look it up in The Insurance Glossary, home to dozens of easy-to-follow definitions for the most common insurance terms. Or, get an online quote in under 5 minutes and find out how affordable personalized home insurance can be.
About the expert: Stefan Tirschler
Stefan is responsible for underwriting leadership, market expansion, and product research and development for Square One's operations. Stefan has earned his Fellow Chartered Insurance Professional designation, and maintains a level 2 general insurance license in British Columbia, Alberta, Saskatchewan, Manitoba and Ontario. Stefan is also an Education Committee member and CIP/GIE instructor for the Insurance Institute of Canada.
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