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The new version of article 1073 of the Civil Code of Québec (CCQ) and sections 3 and 4 of the Regulation to establish various measures in matters of divided co-ownership insurance (Regulation) took effect on April 15, 2021.
Here is an overview of the key changes.
1. Description of the private portions and insufficient insurance
Since June 13, 2020, syndicates have been required to have a description of the private portions available for the co-owners. However, effective April 15, 2021, the building is considered to not comprise any improvements at the time of a claim if the syndicate has not prepared this description. As of this date, the syndicate may have to assume the losses involving improvements made by the co-owners. In such a case, the syndicate could find itself in a situation of having insufficient insurance on the building, since the assessment of the amount necessary for reconstruction might not take into account those improvements.
Remember that if its policy contains a co-insurance rule that applies in the case of a partial loss, this could penalize the syndicate. Insufficient insurance increases the risk of that rule applying.
These aspects should be considered when settling a divided co-ownership claim or underwriting new business.
2. Requirement for appraisal by a certified appraiser
Section 3 of the Regulation, which also took effect on April 15, 2021, stipulates that:
“Only a member of the Ordre professionnel des évaluateurs agréés du Québec may be entrusted with evaluating the amount of the insurance taken out by the syndicate of co-owners that is required to cover the reconstruction of the immovable...”
As specified in article 1073 CCQ, this amount must be evaluated at least every five years.
3. Express and clearly legible exclusions and suggested IBC form
In accordance with article 1073 CCQ, the risks listed in the Regulation are considered as covered by operation of law since April 15, 2021 “unless the policy or a rider sets out, expressly and in clearly legible characters, which of those risks are excluded.” The risks are:
- Theft
- Fire
- Lightning
- Storms
- Hail
- Explosions
- Water leak damage, sewer backup and overflow from appliances connected to water distribution piping within the building
- Strikes
- Riots or civil disturbances
- Impact of an aircraft or vehicle, and
- Vandalism or malicious acts
IBC, in conjunction with an industry committee, analyzed its recommended form for syndicate insurance to see if it should be modified in response to the new provision. The analysis concluded that the exclusions are explicitly and prominently stated and that no modifications were required.
New obligations
The IBC campaign implemented in April revealed that co-owners are actively seeking concise information on their new obligations and those of their syndicate.
IBC has written three blogs on these different topics that you can use and send to your clients:
Other practical tools
This content complements other tools that IBC has developed:
Complete section of the infoassurance site on condominiums: infoassurance – Condo insurance
Tool for settling divided co-ownership claims: Home – IBC Co-ownership (bac-quebec.qc.ca)
Questions? Call our experts: 514-288-4321 or 1-877-288-4321
