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Draft rules for insurance of condominiums : clarifications are requested

by

Andrea Lubeck

4 September 2019 13:30

The draft regulation on the insurance of blocks of flats, published on 17 July last year, requires several clarifications by its entry into force, indicate the Chamber of damage insurance (ChAD), the insurance Bureau of Canada , and the Grouping of the managers and owners of Québec (RGCQ) in their comments filed with the ministry of Finance. The latter had indicated that, in response to comments received, some changes could be made.

One of the aspects that require clarification, according to the three organizations, is the definition of risk ” runoff “, to be covered as of right under the proposed regulations. “[…] Certain terms, such as “runoff” or “storm” are too general and do not exist in insurance contracts “, note TRAY.

The ChAD proposes that the term be ” as inclusive as possible to avoid interpretations leading to an exclusion of the risk “. The term “water damage” should be advocated, according to her and the RGCQ.

The maturity of the garnissement fund self-insurance

The ChAD also asked the government to clarify the rule surrounding the contribution to the fund of self-insurance, since the proposed regulation is not explicit on this subject. The organization deplores ” the very different interpretations that may affect the implementation of the regulation and the protection of the public “.

Thus, three aspects need to be reviewed, according to ChAD : the time or the frequency to which the contribution must be established, the franchise excluded, and effective.

For the first point, she asked that the frequency or timing of the contribution should be clarified by adding, for example, “annual” in the first sentence.

Then, as the RGCQ, the ChAD wishes that the deductible for flood protection to be excluded, in the same way as the deductible for earthquakes. It can reach 25 000 $ in some case, tell the two groups.

The RGCQ proposes to take account of the financial year of a trade union, since it is not the same from one condominium to another. Thus, maturity to garnish the funds, and fill it once used would depend on the beginning and the end of the financial year.

Avoid creating a “bottleneck”

As the RGCQ that the ChAD fear that a “bottleneck” is created by the requirement to appeal to a member of theOrdre professionnel des évaluateurs agréés du Québec to proceed with the mandatory inspection of the building in order to determine the amount of reconstruction to be included in the insurance policy.

The College expects to 1,052 members, including 541 in the employment of private firms. “It can be assumed that the latter would probably be called upon to perform the evaluations done every five years now required by the civil Code of Quebec,” writes the ChAD.

However, Quebec has more than 25 000 syndicates of co-ownership, refers to the body. It therefore requests the department to stagger the assessments over time and to provide for the requirements of entry into force according to the number of units of the trade unions.

The ChAD also suggests to allow professionals to be part of other levels of independent insurers, unions, and the manager of the condominium, owning a professional liability insurance and being adequately trained to do the assessments.

The absence of the notion of the franchise as unreasonable, noticed

In additional comments, the ChAD pointed to the fact that the ” government has chosen not to exercise now its power to determine the criteria [ … ], according to which a deductible is regarded as unreasonable “. The organization mentions that ” this choice can have adverse consequences for the trade unions and the co-owners “.

The ChAD therefore urges the government to include the criteria for determining what is a franchise as unreasonable, in the draft regulations, so that the syndicates of co-ownership avoid finding themselves in situations of discovered insurance or with deductibles or premiums that exceed their financial capabilities.

For its part, the BAC believes that ” all of the new provisions of the condominium, including those that are currently found in the draft law 16, will likely short-term effect of raising the awareness of co-owners in the role of the franchise and, in the medium term, to reduce the claims ratio, which in turn will promote a reduction of the franchise “.

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