Guide and tips

Bill 141: Ensuring co-owners have the means to pay deductibles in case of a disaster

When it comes to insurance, it can be easy to be overwhelmed by the different coverages available. Furthermore, it’s not something most of us want to think about because it’s an expense that covers a hypothetical risk. Many of us will even think this kind of coverage is useless. But when you’re a co-owner, you need to get the right coverage for your building and safeguard your common investment.

In this vein, Bill 141 is a new law that will make it mandatory for syndicates of co-owners to set up a self-insurance fund that is available on short notice. This will ensure the co-ownership is able to pay an insurance deductible in case of a disaster.

Think of insurance as a way to manage risks. In the world of real estate, mortgage lenders need to know that your building is protected before issuing a loan.

Being covered by an insurance is all well and good, but you need to be able to use it if needed. For co-ownerships, the deductible that needs to be paid when making a claim can easily reach an astoundingly high amount depending on claims and the building’s history. Bill 141 was implemented to prevent this kind of situation from occurring.

Setting up a self-insurance fund

This law, which includes a variety of provisions, was adopted in June 2018. A few sections have already entered into force while the remaining will come into force by the end of this year. Among other things, this law will make it mandatory for syndicates to set up a self-insurance fund, which is separate from the contingency fund and the current account, and dedicated to paying the costs of the deductible in case of a claim.

Let’s look at the following example to better understand Bill 141. A water damage incident occurs in one of the units. The deductible listed in the insurance policy is $7,500. Instead of requesting a special contribution from co-owners, the money in the self-insurance fund will be used to pay this deductible while the insurer will be responsible for the remaining repair costs.

It is however possible that the syndicate decides not to make a claim if a disaster occurs. The self-insurance fund can then be used for repair work if there is not enough money in the contingency fund. Co-owners will then need to make sure they add money to the self-insurance fund in their next budgets.

To set up a self-insurance fund adapted to your building, it would be a good idea to add at least twice the amount of the deductibles listed in your insurance policy.

In the previous example, a minimum amount de $15,000 would be sufficient to ensure the co-ownership has enough money to cover a second disaster and would relieve them from the pressure of having to replenish the fund.

Preventing disasters

In addition to the provisions set by Bill 141, another good way of ensuring the lifespan of a building in co-ownerships is to prevent disasters at the source. As an example, the Canadian Institute of Actuaries reveals that 48% of claims are the result of water leaks. Every year in Quebec, more than 500 million dollars are spent to cover this kind of damage. When it comes to co-ownerships, 95% of claims made by syndicates are related to water incidents and 60% of the compensation paid is for water damage. A water leak detection system can help prevent water damage in your building*.

Installing a water leak detection system in your condo building

HydroSolution’s AKWA Wi-Fi leak detection system will automatically shut off the water in case of a leak. The system then sends a message to notify you that a leak has been prevented. AKWA’s turnkey system includes an onsite inspection, an evaluation of your needs, installation, configuration of the water leak detection system, and technical support.

Implementing preventive measures such as the AKWA system and setting up a self-insurance fund as demanded by Bill 141 will make sure your investment is protected for years to come.