Insurance

Two insurance policies are required for divided co-ownership properties: co-owner insurance and syndicate of co-owners insurance. Depending on the nature and extent of the damage sustained, compensation can be paid under one or both policies.

Source: infoassurance.ca — Condo insurance

 

Required insurance contrats

Co-owner insurance

Co-owner insurance covers the furniture, personal effects and personal liability of the co-owner. It also covers improvements made to the owner’s private portion where they can be identified in relation to the description of that portion (i.e. the unit of reference which must be found in the register of co-ownership).

Co-owners of an immovable containing less than 13 fractions used as dwelling units or for the operation of a business must carry a minimum of $1 million in liability insurance. This requirement rises to $2 million for co-owners of an immovable consisting of more than 13 fractions. It should be noted that this requirement applies on the earlier of the following two dates: (1) upon expiration of any existing insurance coverage or (2) on October 15, 2021.

Source: condolegal.com — Definition : Insurance - Improvements made to a private portion

 

Syndicate of co-owners insurance

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Mandatory insurance

A syndicate of co-owners must take out the following insurance policies:

• A property insurance policy covering the entire building including the private portions (except identifiable improvements) and the common portions;
• A policy covering the civil liability of the syndicate towards third parties (including the syndicate’s liability towards the co-owners);
• A policy covering the civil liability of the members of the board of directors;
• A policy covering the civil liability of the manager;
• A policy covering the civil liability of the persons holding office in the meeting of co-owners.

At no time may the co-owners decide to opt out, either by resolution of the board of directors or by resolution of the meeting of co-owners.

The syndicate must also take out the insurance set out in the declaration of co-ownership.

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ARTICLE 1073 OF THE CIVIL CODE OF QUÉBEC

Article 1073 of the Civil Code of Québec states: “The syndicate has an insurable interest in the whole immovable, including the private portions. It shall take out insurance against ordinary risks providing for a reasonable deductible and covering the whole of the immovable, except improvements made by a co-owner to his portion, where they can be identified in relation to the description of that portion. The amount insured must cover the reconstruction of the immovable in accordance with the standards, usage and good practice applicable at that time; the amount must be evaluated at least every five years by a member of a professional order designated by government regulation;

The syndicate shall also take out third person liability insurance for itself and for the members of its board of directors and the manager as well as for the president and the secretary of the general meeting of the co-owners and the other persons responsible for seeing to its proper conduct;

The Government may, by regulation, determine cases in which a deductible is considered unreasonable. In addition, an insurance contract entered into by a syndicate covers, by operation of law, at least the risks prescribed by government regulation, unless the policy or a rider sets out, expressly and in clearly legible characters, which of those risks are excluded. The regulations may establish categories of buildings, in particular on the basis of their size, value or geographic location.”

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Third party liability insurance

In addition to coverage against the usual risks, the law requires the syndicate of co-owners to take out insurance covering its liability towards third parties.

The notion of third party includes persons outside the co-ownership – a passer-by for example – but also the co-owners and other persons present in the building, e.g. a tenant or a guest.

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Notion of liability

The notion of liability includes:

• damage caused by lack of maintenance or design or construction defects of the common portions:
  ex.: a piece of a brick wall detaches from the building due to lack of maintenance and injures a passer-by;
• damage resulting from a decision made by the syndicate:
  ex.: the decision to have a pool installed by someone who is not an expert, which results in improper installation causing injury to a user of the equipment;
• damage caused by the errors, omissions or negligent acts of the syndicate representatives:
  ex.: a burglary resulting from the negligence of the security guard.

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Liability insurance policy

The liability insurance policy must specify an amount of insurance coverage. If the declaration of co-ownership does not specify an amount, it is up to the board of directors to determine the amount. In this case, it is recommended that an insurance professional be consulted to determine an appropriate amount.

It is in the interest of co-owners to have an insurance policy covering liability towards third parties. When an unfortunate event falls under the responsibility of the syndicate of co-owners and there is no policy covering this responsibility, the financial burden of compensating the affected third party will fall to the co-owners who were in place at the time of the incident. This means that a former co-owner could be required to pay an amount to compensate a person who was injured on the property while he was a co-owner, even if he is no longer so.

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Property insurance

Since April 15, 2021, a syndicate of co-owners must take out property insurance against the usual risks, including the following:

• Theft;
• Fire;
• Lightning;
• Storm;
• Strike;
• Riot of civil disturbance;
• Aircraft or vehicle impact;
• Acts of vandalism or malice.

 

 

For more details: Insurance policies and divided co-ownership: Duty to verify and inform and Co-ownership insurance: Overview of the new rules