The day-to-day administration of the co-ownership may be entrusted to a co-ownership manager who may or not be chosen from the co-owners; thus, the syndicate can delegate to the co-ownership manager other tasks and responsibilities that are generally handled by the board of directors such as the collection of claims, the publication of a notice regarding a legal hypothec on the fraction of the defaulting co-owner as well as to institute legal proceedings for all matters concerning its administration. In brief, the task management of the co-ownership manager can be complex and this is why it's important to take out civil liability insurance to cover its faults, its errors or its negligence.
Multiple risks
In the event it fails to observe its duty of prudence and diligence in carrying out its mandate, the personal civil liability of the co-ownership manager can be engaged and thus, it may be the object of legal proceedings in the case of a serious breach to its obligations and so, whether it's paid or not; for example, this could be the case of the manager who loses documents or causes a prejudice to third party members or to one or several co-owners.
Purpose of the coverage
Civil liability insurance of the co-ownership manager limits the impact of the financial consequences that the latter would suffer on its assets; it protects it by assuming its defence, that is to say by paying the costs associated to professional fees related to lawyers as well as other court fees. Furthermore, if the co-ownership manager is held liable, the insurance will pay in principle the damages and other costs that the insured is required to pay following a loss-claim.
Obligation to take out insurance
Since April 15, 2021, Bill 141 has amended the Civil Code of Québec to require syndicates of co-owners to take out civil liability insurance covering the co-ownership manager.
Exclusions
The insurance policies regarding civil liability insurance of the co-ownership manager don't cover all situations; they usually include several exclusions. For instance, damages caused by intentional fault and gross negligence as well as fraudulent acts are generally not covered by the insurance contract.
WHAT YOU SHOULD KNOW! A co-ownership manager is exposed to certain risks that may engage its personal liability; it is therefore in its best interest to require from the board of directors to take out civil liability insurance so that damages caused to third party members are covered by the insurance policy.
WHAT TO KEEP IN MIND: The syndicate of co-owners has the legal obligation to take out civil liability insurance for the co-ownership managers.
WARNING! Even though the multi-risk insurances underwritten by the syndicate generally contain coverage regarding the civil liability of directors, the latter does not necessarily cover the actions of the co-ownership managers; to avoid any doubt, the board of directors must ensure that the civil liability insurance of the directors is extended to the co-ownership managers.
