Quebec’s proposed condo insurance deductibles should be affordable says regulator

Published: November 7, 2018

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Quebec’s proposed regulations on deductibles for condo insurance will need to be affordable, according to the province’s self-regulatory organization for brokers. On Monday, the Chambre de l’assurance de dommages (ChAD) says the deductibles will also need to be easy to understand and consider how many units are in a condominium.

“The government is saying, ‘Well, you shouldn’t be able to increase the deductible too much because otherwise if you do have a claim, you may not have enough money to pay it,’” said Ingi Khouzam, compliance lawyer with the ChAD. “The idea is: does the condominium [corporation] have enough money to pay that deductible once a claim arrives?”

ChAD believes the deductibles should be clear enough to present limited scenarios. For example, the condo corporation’s liquidities should be sufficient to cover a claim, or the owners of the condos should know how much they must pay into the fund.

Furthermore, the regulatory body says any self-insurance funds should be at least twice as much as the deductible provided. Condo insurance deductible updates in Quebec are part of Bill 141, which makes changes to various aspects of the financial sector. Bill 141 comes into effect June 13, 2019.

The recommendations of ChAS are now before the provincial finance ministry as part of ongoing consultations on the proposed changes. Under current law, insurance companies contractually agree deductibles beforehand.

Minimum Liability

There is currently an “industry standard” of $1 million in liability insurance, but this amount is not mandated by Quebec’s laws. ChAD says the government should implement a mandatory minimum for condo insurance liability. This would be the amount individual co-owners need for claims.

“We haven’t seen studies or any indication that this has proven insufficient,” Khouzam said. “If the law says, ‘You need to have liability insurance,’ and the [broker’s] clients asks, ‘How much should I get?’ It’s difficult for them if there’s no clarity on what is the expectation of the government.”