Notice of loss: What is the situation?

The life of the co-ownership is not only of interest to its owners and occupants, but also to their insurers. This is all the more true since it is known to all that condominium disasters are numerous: water leak, water damages, vandalism, fire, etc. Let's go back to the basics of property insurance. The Syndicate is required to take out insurance covering  the common portions, the private portions (excluding improvements made to them) and movable property belonging to the syndicate. As for the improvements that have been made to the units, it is up to each co-owner to protect them with individual insurance, both those made by the previous owners and theirs. Finally, it is generally required (if only for the protection of co-owners) that tenants are also insured with respect to their movable property.

However, the exercise doesn't stop there. Indeed, article 2470 of the Civil Code of Quebec requires every insured to "declare any loss likely to involve the guarantee". And the Act adds: "as soon as he has knowledge of it". In other words, a loss – even if it is negligible – must be reported to the syndicate's insurer, provided that the damage is covered.  If the loss affects the common portions and private portions (excluding improvements)  of the co-ownership, it is up to the board of directors to take care  of the notice of loss with the insurer of the  syndicate and the repair of the latter.

The syndicate therefore has two obligations: to declare and to declare immediately. If thesyndicate fails in its duties, the insurer could invoke, against the syndicate, any clause of the policy that provides for the forfeiture of the right to compensation, provided that it  can prove that it has suffered injury.  However, do not panic: this period only takes effect from the moment the damage is discovered.

In practice, very few directors are aware of theirobligationsin this area. Either they believe  that the syndicate is not liable, or they assess that the resulting damages will be less or slightly higher than the deductible or deductible.  However, it is risky not to report a loss, because the insurer could consider - if he were to discover it later - that the insured is in bad faith. It would therefore be justified to terminate or not to renew the insurance contract.

This is always a bad decision, especially in co-ownership. Indeed, the building is a whole and some claims affect indiscriminately the common portions,  the private portions and the improvements made to them. Thus, water damage due to a defective water heater, one of the most frequent condominium disasters, will often affect not only the private portion where the water heater is located, but also the kitchen cabinets of the private part below, cabinets that were installed after the construction of the building. If this unit is occupied by a tenant, the tenant's movable property could also be affected. Insurers willtherefore have to be notified and, in particular, that of the Syndicate.

The Syndicate's insurance grants, in fact, a guarantee in part without seeking responsibility as to the origin of the loss. The fact that the syndicate is not a priori responsible is therefore not a cause that can justify a failure to declare. However, for a director, not declaring a claim can mean engaging his personal liability and very often, in this type of situation, the latter will not be covered by the insurance of the Syndicate.

To prevent co-owners and directors of syndicates from falling into these legal traps, Me Yves Joli-Cœur has written a book dedicated to the issue and entitled " L’assurance condo : Tout ce qu’il faut savoir ". With more than a hundred questions / answers, this book is clear and accessible to all. After " Le condo : Tout ce qu’il faut savoir ", it is the essential tool to insure yourself and find your way around in this often unknown and distant land that is insurance married to the co-ownership. Pocket size, it will follow you to all airports in the world without having to be declared!

Yves Joli-Coeur, Ad. E. 
Lawyer
Dunton Rainville
3055 Boulevard Saint-Martin O
Bureau 610
Laval, QC H7T 0J3
Tél. : (450) 686-8683
Courriel : [email protected]

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