Association calls for reforms to insurance rule

The Association Québécoise des Gestionnaires de Copropriétés (AQGC) has responded to the Quebec government’s plan to change co-ownership rules, saying that all stakeholders have to participate so that the insurance rules work as intended.

According to AQGC, Article 1074.2 of the Civil Code of Québec – which came into force on December 13, 2018 – virtually allowed insurers to “systematically” refuse to compensate when a loss emanates from a condominium co-owner unit. This has led to the entire community of co-owners having to pay out-of-pocket for any restoration work needed at the affected private and common portions of the condominium.

“Many co-owners come to wonder why they pay such insurance premiums since insurers never pay when the syndicate tries to engage the responsibility of a co-owner following a disaster in his unit,” the group explained in a release.

Quebec’s Ministry of Finance is looking to update the law through a recently proposed regulation that caps the contribution to the self-insurance fund at $100,000. But AGCQ believes that the measure “will be of little use to a vast majority of condominiums.”

“Let us remember that this new self-insurance fund must be used by syndicates to provide sufficient liquidity to pay the amounts of insurance deductibles for all claims that the individual insurers of the co-owners refuse to assume following the legislative change put in place in December 2018,” a statement from the AQGC said. “However, this self-insurance fund could indeed be reduced if we returned to a successful insurance plan. Until then, whether we cap the contribution to this fund at $100,000 or not, in the end it will always be the co-owners who will pay the bill.”

Condo syndicate insurance premiums and deductibles (which can run up to $500,000) have also continued to rise, AQGC also pointed out, despite their risks reducing over time. Currently, syndicates are obliged to make reparation for the damage caused to the building, but there is no guarantee of compensation for syndicates except through costly litigation, the group said.

To resolve the issues surrounding condominium insurance, AQGC has listed three things to focus on:

Implement mandatory inspections on Quebec construction sites to mitigate construction deficiencies.
Make guaranty plans more effective, which would save condo syndicates from having to take legal action over damage claims.
Correct the wording of Article 1074.2 of the Civil Code of Québec, as it remains poorly worded and has led to disputes.
The condominium sector needs more insurers to provide coverage in the market.

AQGC ended its statement by saying that all stakeholders in the issue should be participating in the plans to reform co-ownership rules to find a sustainable solution.