Insurance deductible payment for co-ownership - who pays? | ScriptaLegal
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Frequently asked questions > Co-ownership/Condominium > Divided co-ownership > Who is responsible for the payment of the insurance deductible for a co-ownership?

Who is responsible for the payment of the insurance deductible for a co-ownership?

To adequately answer this question, it is important to first recall the constant duality in terms of insurance regarding buildings held in divided co-ownership; Indeed, two insurance policies are required to continuously coexist, namely:

  • The main insurance policy to cover the whole building for its rebuilding value at 100% or "replacement cost", which is taken out by the legal person or body corporate that forms the syndicate of co-owners, which is responsible for the preservation of the building. This policy is also contracted in the name chosen for the syndicate of co-owners, which is the primary insured.

The main insurance covers all the common portions (including the roof, foundations, corridors, hallways, stairwells, etc.) of the building held in divided co-ownership, and the private units (walls, floors and all the original builder's fixtures and fittings in the bathroom, the kitchen, etc.)

  • The insurance policies covering personal effects, personal property, liability of each co-owner, along with the improvements made by a co-owner on a particular private unit, are contracted and borne separately by each co-owner.

In light of the subject matter of the coverage of each of type of insurance with regard to buildings held in divided co-ownership, the logic suggests that the payment of the insurance deductible, following a post-loss claim and regardless of the number of private units that have been affected, be the responsibility of the insured, and in this case, the subject syndicate of co-owners. The syndicate of co-owners, being a body of co-owners, will assume payment of this deductible based on the relative value of their unit in the entire building.

Thus, this deductible will be subject to a special contribution by all the co-owners so that the restoration work planned following a loss can be completed.

In doing so, the syndicate of co-owners retains all rights and remedies which will enable it to claim the amount of the deductible paid from the co-owner held responsible for the loss. Such co-owner will then claim from his or her own insurance company that covers its civil liability in order for the syndicate of co-owners to be compensated for the amount of deductible paid and for the body of co-owners not to have to financially assume the fault of one of them.

Finally, it must be kept in mind that a decision of the Small Claims Court* has confirmed that the syndicate is not bound by any claims agreement of the Insurance Bureau of Canada (IBC) and that if insurance companies wish to reach an agreement among themselves in a situation of co-insurance, this does not concern the syndicate which has only a legal relationship with a co-owner who is civilly liable for the loss. The syndicate does not have to turn to the insurance companies of the other co-owners who sustained damage and who are not responsible for the loss resulting in the claim of a portion of the deductible paid by the syndicate.

* Court of Québec, Small Claims Division, #540-32-014293-045, May 4th, 2005

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