Definition : Self-Insurance Fund

Fund dedicated to the payment of the deductible that the syndicate of co-owners is required to pay in relation with the insurance coverage of the co-ownership. This fund is also dedicated to the repair of the damage caused to property in which the syndicate has an insurable interest, when the contingency fund  or an insurance indemnity can not provide for it (e.g. in the case of a insurance limit, underinsurance or of an exclusions etc.). It is the duty of the Board of Directors, after consultation with the General Meeting of the Co-owners, to fix the amounts to be paid into the self-insurance fund.

 

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The Self-Insurance Fund will become mandatory on April 15, 2022 following the adoption of the Bill 141, in 2018, which notably created section 1071.1 of the Civil Code of Québec. It had become necessary due to a substantial increase in insurance deductibles. Most of the time, the amount of these deductibles was formerly negligible, whereas today, it can reach tens, even hundreds of thousands of dollars. Several syndicates of co-owners did not wait, or will not wait until April 15, 2022, in order to constitute a Self-Insurance Fund, according to their management based on logic and pragmatism.
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Almost every insurance policy includes deductibles, in varying amounts according to the insured risk (e.g. fire and water damage). In co-ownerships, deductibles are a factor in the Building insurance, and in the third party liability insurance of the syndicate, directors, general meeting officers, co-ownership manager (gérant) and of the condo manager (gestionnaire). Regarding co-owner’s insurance, generally each home insurance policy contains one or more deductibles for various amounts according with the nature of the loss.  
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Preparing a budget forecast is an unavoidable task in co ownership. Its preparation, preliminary examination and adoption will ensure the proper functioning of the syndicate of co-owners. It is up to the Board of Directors to define its terms, in view of the expenses that will have to be paid to allow a syndicate to meet its obligations. The budget also makes it possible to fix the amount of the contributions of each co-owner to the expenses of the co-ownership. It will be prepared by the Board of Directors or property manager, based on the amounts spent in preceding financial periods, as well as anticipated non-recurring expenses. The preparation of the budget forecast requires time and rigor.  
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The Law and the overwhelming majority of declarations of co-ownership require that syndicates of co-owners insure their building. This may seem surprising at first glance as the syndicate does not own the private portions nor the common portions. However, its main object is to ensure the preservation and the longevity of the building and to manage and administer it diligently following rules of the trade. This is why the legislator has given to the syndicate an insurable interest and has made it compulsory that it subscribe building insurance.  
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