Condo building insurance: Main changes to the Civil Code of Québec
In December 2018, several changes to the Civil Code of Québec affecting divided co-ownerships came into force. Keep reading to find out more about the main changes and how they impact condo syndicates.
1. Condo syndicates now responsible for repairing damage
When a loss occurs, condo syndicates are now responsible for repairing all damage to the insured property, including damage to the individually owned portions of the building (each condo owner’s unit). Any damage to improvements condo owners have made or to their personal belongings is not covered.
When a condo syndicate submits a claim to its insurance company, some expenses may still not be eligible for reimbursement, such as:
- All applicable deductibles
- The portion of damage that exceeds the insurance policy limit (e.g., a sewer back-up causes $125,000 in damage, but the insurance policy has a $100,000 limit)
- The total cost of all damage, if the risk that has caused the loss isn’t covered under the insurance policy
Here’s how condo syndicates can recover these amounts:
If the loss was not caused by a condo owner
Sometimes none of the condo owners are at fault. Loss assessment is when the condo syndicate shares responsibility for the damage with all condo owners.
For example:
A building’s main electrical panel breaks and causes damages to the building. The condo syndicate’s insurance company takes care of the repairs, but the condo syndicate must pay a $10,000 deductible. The condo syndicate can then split this cost among all condo owners, regardless of whether specific units or common areas were affected by the damage.
If the loss was caused by a condo owner
If a condo owner is found at fault, the condo syndicate may ask them to pay the entire amount not covered under the syndicate’s insurance policy.
For example:
You don’t put your cigarette out properly, and this starts a fire in your unit that spreads to other parts of the building. The condo syndicate’s insurance company takes care of the repairs, but the condo syndicate must pay a $10,000 deductible. Since the fire was your fault, the condo syndicate may ask you to reimburse.
2. Description of the individually owned portions of a building1
From now on, condo syndicates must provide all condo owners with a description of the individually owned portions of the building which describes the original unit and is detailed enough to identify improvements the condo owners have made to their respective units.
If the condo syndicate fails to prepare a detailed description of the individually owned portions and any improvements made, any damage to the building may need to be claimed under the building’s insurance policy, including costs to repair any improvements that condo owners have made to their units.
See the Inventory for establishing the description of a private portion (PDF, 808 KB) tool developed by the Insurance Bureau of Canada (IBC).
3. Future provisions
Directors and officers liability coverage2
This coverage is for directors and officers, as well as the president, secretary, meeting officers and other individuals responsible for overseeing how the condo building is run.
It is hard to predict how much a lawsuit might ultimately cost. Condo directors and board members are more exposed to the risk of lawsuits because of the positions they hold.
Mandatory appraisal of the building by a professional2
Buildings must be appraised at least once every 5 years by a member of a government-approved professional corporation.
The condo syndicate is responsible for insuring the building at its fair value.
Creation of a self-insurance fund3
This is a new fund, that must be set up by the condo syndicate. It is not the same as the contingency fund.
The fund must be equal to the syndicate’s highest deductible, excluding earthquake and flood deductibles.
New list of usual risks
These risks are covered by your contract.
Impact on homeowners
Condo unit owners must take out civil liability insurance based on the number of units.
Additional information
Product descriptions on this page are for information only. Full details regarding coverage and exclusions can be found in the insurance policy, which always prevails. Conditions, exclusions and limitations may apply.