Condo insurance: What’s changed since Bill 141 was introduced?
There were a number of changes made to the Civil Code of Québec since Bill 141 was introduced in 2018. This impacts you if you’re a co-owner. This also applies to you if you’re a condominium syndicate director. Let’s take a look at the new provisions under the bill and the risks covered under the law.
Condo owners, check your insurance
If you’re the owner of a condo unit, your civil liability coverage should amount to...
- at least $1,000,000 for a building of 12 units or less
- at least $2,000,000 for a building of 13 units or more
This coverage is designed to protect the other co-owners in the event of damage for which you’re responsible. For example, your teenager forgot to turn off the bathtub tap !
Condominium syndicate directors, here are your obligations under the new bill
Are you part of a condominium syndicate ? You should then :
1. Have the building appraised every five years by a member of the Ordre des évaluateurs du Québec (OEAQ).
Knowing the building’s actual value enables you to tailor your insurance to pay for the reconstruction cost in the event of a loss. What you're trying to avoid : losing money if the insurance coverage is insufficient.
2. Provide a description of private portions
Co-owners may have made changes to their units, but what did the units look like before the renovations (or private portions) ? The condominium syndicate is now required to provide a description of the original condition of the private portions of the building.
This requirement facilitates the settlement of insurance claims, both for the condominium syndicate and co-owners. The description clarifies what the condominium syndicate’s and co-owners’ insurance covers. Co-owners can each tailor their home insurance to their specific needs.
Overview of what each insurance covers (actual cases)*
| Examples of situations if you’re a co-owner (for covered losses) | Your condo insurance covers... | The syndicate insurance covers... |
|---|---|---|
| A break in a water supply pipe causes water damage to your condo’s wood floors. You had replaced the wood flooring two years ago. |
The difference between the value of the floor covering in standard condo units and the value of your floors.
|
The value of the floor covering described for a standard unit |
|
Your computer equipment is no longer usable because of a loss. |
Your damaged personal property, including your equipment |
|
| Following a fire, the building is burned to the ground, but the condominium syndicate amount is insufficient to cover the cost of reconstruction. |
Your share of the damage not covered under the syndicate insurance once the shared costs are divided |
The damage covered by the syndicate insurance |
*At all times, terms and conditions pertaining to coverage are governed solely by the insurance contract. Some conditions and exclusions apply.
3. Creating a self-insurance fund We’re not referring here to the contingency fund, but a second fund.
The first fund stays under the responsibility of the union; it is used to cover the costs of major repairs, i.e. changing windows or roofing.
The self-insurance fund is to be used to cover an insurance deductible in the event of a loss, which is the highest deductible amount included in the insurance contract. Flood and earthquake deductibles are not included in the calculation.
4. Overseeing repairs following damage to the building
The syndicate is responsible for having damage to the building repaired following a loss, whether it is in the condo units or the common portions (e.g. hallway). This does not include damage to the co-owners’ property or improvements made to their condo. As illustrated in our cases in the table, each co-owner must contact his or her home insurer for improvements made to their condo.
5. Make sure that the building and syndicate is properly insured
Property and civil liability coverage must be included to ensure adequate insurance coverage. Minimum coverage must include:
- Basic coverage to repair any damage to the building in both the units and common portions.
- Realistic insurance coverage – based on the building’s valuation – to cover the reconstruction costs in the event of a major disaster, including demolition and debris removal costs.
- Civil liability insurance for individuals who are responsible for managing the building; this coverage includes the liability of the president and the secretary of the co-owners’ meeting, as well as the manager and members of the board of directors. Such insurance coverage is mandatory because most condominium syndicate directors are not directors by trade. Co-owners are generally involved in managing the building. In the event of a major error, a “safety net” will offset any financial impact.
As a co-owner or director, you can see that Bill 141 brings its share of changes. There’s more to their role than just managing the building: a co-ownership is a major asset so increasing coverage for those who invest their time and money in its administration is a win-win situation!