The law obliges syndicates of co-owners to insure their immovable; the majority of declarations of co-ownerships also have such requirement. This can be explained by the syndicate's main objective which consists to ensure the preservation of the immovable and its longevity; this is why the legislator has given to the syndicate an insurable interest and has made it compulsory that it concludes insurance for the building. In addition, this legal requirement aims to protect all co-owners against significant financial losses in case of disasters affecting the common or private portions of the building.
Covered property
The insurances of a building must cover the common portions, the private portions excluding the improvements made to them as well as the syndicate’s movable property; this subscription should be taken in its name which will appear in the insurance policy. It's important to keep in mind that in the context of building insurance, neither the co-owners nor their hypothecary creditors are the insured. As for the improvements made to the private portions, it is the duty of each co-owner to protect them by the means of an individual insurance and so, including those done by the current co-owner or those that a previous owner may have made.
Reference unit
Furthermore, the syndicate must keep at the disposal of the co-owners a reference unit, that is to say a description of the private portions that is sufficiently precise to allow any improvements made by the co-owners to be identified and so, in accordance with paragraph 3 of section 1070 of the Civil Code of Québec; this description must be filed in the register of co-ownership so that the co-owners requesting it may consult it.
Covered risks
Unless the insurance policy or the rider expressly indicates in clearly legible characters the risks that are excluded, section 4 of the Regulation to establish various measures in matters of divided co-ownership insurance published on April 15, 2020 in the Gazette officielle du Québec provides a specific list of risks covered "by right" in a property insurance contract, that is to say theft, fire, lightning, storms, hail, explosions, sewer backup and overflows from appliances connected to water distribution piping in the building, strikes, riots or civil disturbances, the impact of an aircraft or vehicle as well as vandalism or malicious acts; this section was enforced on April 15, 2021. For syndicates that have already concluded property insurance and that's already been enforced, the obligation will only apply from the renewal of the insurance policy if it takes place within 12 months following April 15, 2021; if the expiry of the insurance policy occurs after April 15, 2022, everything will apply as of the latter date.
Furthermore, only accidental losses are covered and thus, insurers are protected against the consequences of unpredictable, sudden and random events. Also, insurers don't cover losses resulting from a defect inherent in the property such as a latent defect or a defect in workmanship of the immovable.
Reconstruction cost
Since April 15, 2021 or subsequently if the insurance coverage expires after that date, the legislator obliges the syndicate of co-owners to take out insurance covering the reconstruction cost of the immovable; this corresponds to the amount that would have to be paid to rebuild the entire immovable in the event of a total loss and so, regardless of its state of disrepair. The reconstruction cost must consider the cost of demolition, professional fees such as those of the engineer or the architect, the cost of retrofitting the building up to standards, usage and best practices, as well as the applicable taxes (GST and QST).
Required amount of coverage
As of April 15, 2021, the reconstruction cost must be evaluated at least every five years by a chartered appraiser member in good standing of the Quebec Order of chartered appraisers (Ordre des évaluateurs agréés du Québec) (OEAQ).
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WHAT YOU SHOULD KNOW! The civil liability of the members of the board of directors could be engaged if the latter doesn't do the adequate estimations regarding the value of the immovable.
WHAT TO KEEP IN MIND: The syndicate's insurance policy must provide a waiver of any future legal recourse in subrogation against the co-owners, the people who are a member of a co-owner’s household, the directors, the co-ownership manager, the president and the secretary of the meeting of co-owners as well as the officer; since December 13, 2018, such subrogatory recourse of the syndicate's insurer is legally excluded except for body injury damage or moral damage or even a prejudice due to intentional fault or gross fault.
WARNING! During the subscription of the syndicate’s insurance policy, the board of directors must declare any information likely to influence an insurer in determining the insurance premium, the appraisal of the risk or the decision to cover; if it fails to provide all relevant information to the insurer, the syndicate may be held liable for a denial of coverage or a reduced indemnity following a claim.
