New information for condo owners

New information for condo owners

Last year, Quebec’s Liberal government passed Bill 141, an Act mainly to improve the regulation of the financial sector, the protection of deposits of money and the operation of financial institutions.

The law, whose purpose is to review the financial sector framework, has an impact on condo insurance.

Condo associations have new obligations that will inevitably affect condo owners, especially when making a claim to an insurer.

List of improvements

The condo association must keep an up-to-date registry of improvements made to all condo units.

A co-owner who renovates or improves their condo must inform the association and provide details specifying the nature and value of the work. It is recommended to keep all receipts in order to assess the value of work carried out in each unit.

In the absence of a registry, the condo association’s insurer is responsible for compensating improvements made by each co-owner. The amount of coverage might be insufficient if no list of improvements is available.

What this means for co-owners

The insurance company will be responsible for paying for completed renovations if, for example, a co-owner replaces their laminated countertop with a quartz one (and this improvement is recorded in the registry).

In contrast, in the absence of a registry of improvements, the condo association’s insurance company will only pay for the original fixtures.

Fair amount of insurance, reasonable deductible

The condo association has to take out enough insurance coverage to rebuild the current building.

To do this, the building must be appraised at least once every 5 years to determine its value. This appraisal must be carried out by a member of a professional order.

The insurance policy must also have a reasonable deductible. In the event of a claim, the association must be able to pay the deductible listed in its insurance policy.

What this means for co-owners

Insufficient coverage, deductibles and lack of coverage in an insurance policy are henceforth considered as common expenses fees for the condo association.

If the building’s coverage amount is insufficient or if the deductible is too high…

  • Co-owners will be asked to pay what the insurer will not reimburse.
  • Damages not covered under the condo association’s policy that affect the building and condo units (excluding improvements) must be divided among and paid by all co-owners, even those who suffered no damage.

A new self-insurance fund

The condo association must establish a self-insurance fund to supplement the operating fund and contingency fund.

This new fund will be used to pay deductibles when a claim is filed. It will also cover costs that exceed insurance coverage limits or in the absence of home insurance protection in the condo association’s policy.

What this means for co-owners

Common expenses fees will probably increase due to the addition of a self-insurance fund.

If the association decides not to dip into its self-insurance fund or if this fund is not liquid enough, every co-owner has to pay a part of any repair costs (according to their proportionate share) when a claim is filed.

If you caused the damage

The condo association could ask you to cover the cost of damage you caused to the building or condo unit(s).

The association will not ask you to reimburse the entire cost of repairs, rather only the portion of the claim not covered under the association’s insurance policy.

The civil liability portion of your home insurance policy will cover a part of the reimbursement requested from the condo association.

Note: This blog post is provided for information purposes only. It is not a substitute for professional legal, financial or fiscal advice. For advice specific to your personal situation, always speak with your advisor. SSQ Insurance cannot be held responsible for any decision made as a result of reading this blog post.