It is important to consider that there are two categories of insurance contracts in co-ownership insurance: that of each co-owner, and that of the co-ownership syndicate. Co-owners and syndicates each have certain obligations and responsibilities in order to preserve their joint property.
If you are a co-owner or the director of a syndicate, feel free to talk to your damage insurance agent or broker in order to make sure you understand the coverage offered in each of the contracts. Professionals certified by the Autorité des marchés financiers and governed by the Chambre de l’assurance de dommages (ChAD) are obligated to advise you and explain your contract’s limitations and exclusions.
Here is what every contract should cover:
|Co-owner occupant contract||Co-ownership syndicate contract|
As a co-owner, you are responsible for taking out a personal home insurance policy which covers:
As a co-ownership syndicate, you must take out insurance for*:1
2. The property and furniture belonging to the co-ownership syndicate.
3. Third party liability for the co-ownership syndicate, the members of its board of directors, the manager and any other person responsible for ensuring that the co-owners’ assembly runs smoothly.
*Certain requirements are not yet in effect. They will be by June 13, 2021, at the latest. The ChAD recommends that syndicates insure all of these elements immediately, where possible, in order to protect the collective property.
Some insurers offer co-owners “Extensions of Coverage – Loss Assessment” to reimburse the cost of certain special assessments related to repairing damage not covered by the syndicate’s insurance.
Caution: For this coverage to apply, you must be insured against all risks to which you may be exposed in apportionment. For example, even on a higher floor, you must have sewer backup coverage for your insurer to compensate you.
The declaration of co-ownership
The declaration of co-ownership, which includes the operating rules of the co-ownership syndicate, can contain specific requirements for each co-owner’s home insurance. For example, it can require a minimum amount of third-party liability and specific coverage such as water damage endorsement. This is an essential document to show your damage insurance professional when taking out or renewing an insurance contract.
Co-ownership legislation is evolving. Many changes regarding co-ownership insurance came into effect on December 13, 2018, following the passage of Bill 141. Among other things, the co-ownership syndicate is now required to keep a register identifying the improvements made to each co-owner’s private portion.
To this end, the Insurance Bureau of Canada has created the Inventory for establishing the description of a private portion tool to help syndicates establish their registers.
Taking out or renewing co-ownership insurance
When renewing your insurance, take the time to talk to your damage insurance agent or broker. They are required3 to advise you about the protection that best meets your needs, the syndicate’s insurance coverage and the requirements of the declaration of co-ownership. Specifically, you should discuss the following with your agent or broker:
- The total amount for which the building is insured by the co-ownership syndicate’s insurance.
- Amounts accumulated in the contingency fund and self-insurance fund4.
- The amount of the deductibles provided for in the syndicate contract. This will determine the required amount for the self-insurance fund.
- The existence of a building maintenance log or a prevention and maintenance program.
- The possibility of “Extensions of Coverage – Loss Assessment.” (ancre vers encadré plus haut)
- The adequacy of additional living expenses if you have to be relocated for an extended period of time following a loss.
10 questions to ask yourself
It is important to tell your damage insurance agent or broker about any changes that may affect your coverage. Failure to do so may lead to you being partially or not at all compensated for a loss. Here are 10 example situations that could require changes to your contract.
1. Have you acquired valuable property such as computers, electronic equipment, jewellery, bicycles, antiques, works of art or a wine cellar?
2. Do you have an individual water heater over 10 years old or have you installed a secondary heating system (wood, gas, oil, etc.)?
3. Have you become the owner of an animal such as a dog or an exotic animal?
4. Do you have a new person living in your unit or is there a new person working there on a regular basis?
5. Do you rent or plan to rent your unit to a third party, including home exchanges or short-term rentals?
Caution: Some declarations of co-ownership don’t allow short-term renting or provide that the co-owner remains liable for any damage caused by a tenant. You can add a requirement for civil liability insurance in the lease.
6. Have you had your alarm system installed or deactivated?
7. Do you carry out professional or commercial activities at home or do you keep work-related equipment there such as tools or computers?
8. Have previous owners made any renovations that have added value to your unit or do you plan to make any significant improvements, such as refurbishing cabinets with higher quality material?
Caution: Ask your syndicate of co-ownership for a description of the private portions to identify possible improvements that have been made and clarify what insurance covers what.
9. Are you storing any property away from your unit, for example personal items left at a cottage you temporarily rent out, or at a campground?
10. Has the syndicate of co-ownership made any changes to the central heating or hot water system of the building or your unit?
Taking out or renewing co-ownership syndicate insurance
The co-ownership syndicate’s board of directors is usually made up of elected volunteers. If you are part of the syndicate’s board of directors, it might seem difficult for you to understand what information might have an impact on the syndicate’s insurance needs. That’s why your damage insurance agent or broker is your best ally, there to answer your questions and advise you regarding your co-ownership syndicate insurance. Talk to your agent or broker about:
- The history of the building: damage insurance professionals will be better able to adapt the coverage to the needs of the co-ownership syndicate if they have all the relevant information about the building. Certain information regarding “the history of the co-ownership” will be very useful to them, including:
- The list of work in progress and work that has been completed;
- The most recent professional evaluation of the building (and previous copies, if available);
- Loss history;
- Preventive measures already in place;
- Statements for the contingency fund and the co-ownership’s finances;
- Special assessments and their use.
2. The register describing the private portions.
3. The declaration of co-ownership: since the declaration includes all of the rules for the co-ownership syndicate, it can include certain requirements for the syndicate’s insurance. For example, it could require the syndicate to take out certain types of coverage.
4. The possibility of adding additional coverage or taking out a specialty program for co-ownership.
Other important documents to have easily accessible
It is recommended that the syndicate keep the following documents on hand in order to be able to answer co-owners’ and damage insurance professionals’ questions in case, for example, a loss occurs:
- Building plans and cost estimates;
- Financial statements and reports from recent years;
- The syndicate’s current insurance policy (including specific conditions);
- The co-ownership insurance policies (or proofs of insurance);
- Documents related to the co-ownership property (inventory of property, bills, pictures, storage areas, etc.);
- Contracts with third parties (such as services to call in case of emergency).
To find out more about claims adjustment in a co-ownership, you can consult the Settling Divided Co-Ownership Claims website developed by the Insurance Bureau of Canada. There, you will find articles of law regarding co-ownership insurance as well as information about various possible situations, such as:
- when the syndicate submits a claim to its insurer;
- in case of absence of insurance;
- when the damage is less than the syndicate’s deductible;
- in case of insufficient insurance;
- when the syndicate decides not to submit a claim.
1. Under Bill 141, adopted on December 13, 2018, certain provisions will enter into effect after the new regulation is adopted, including the minimum amount required for co-owners’ third party liability insurance.
2. Section 1073 of the Civil Code of Québec
3. Code of ethics of damage insurance representatives
4. Under Bill 141, adopted on December 13, 2018, certain provisions will enter into effect after the new regulation is adopted, including the minimum required contribution to the self-insurance fund.