Construction and civil liability insurance

The Law states that your syndicate's object, therefore its mission is "[...] the preservation of the immovable, the maintenance and administration of the common portions [...]." This implies that it has a duty to have carried out, over time, the work required to prevent the deterioration of the common portions of the immovable. The maintenance and conservation of its built up patrimony are therefore a must for any self-respecting co-ownership.

Yet, the syndicates of co-owners are, more than ever, confronted to major restoration work in their aging building. Compounding this reality are complex regulations regarding the safety of the buildings ( Building Chapter of the Safety Code (CBCS), as well as tighter requirements to keep up with new standards. These requirements relate, inter alia, to the refection of roofs, facades and parking slabs.

Compulsory insurance

Under Article 1073 of the Civil Code of Québec, any syndicate of co-ownership must subscribe (minimally) two insurance policies, one that will protect the real estate assets of the owners in the event of a loss covering  the building for its "replacement value”, and a second one to cover its civil liability. However, these insurance products generally do not have as one of their objects the coverage of risks associated with construction.

Work that may involve the civil liability of the syndicate

The contractor performing work in the common portions of a co-ownership represents an increased risk. Should his work result in material damage to the   personal property of the co-owners or to neighbouring buildings, the civil liability of the syndicate could be engaged. Its insurer may be required, therefore, to assume the costs resulting from a claim.

For this reason, the Civil Code of Quebec provides that any insured must notify its insurer, in the event he is planning to undertake work that may increase the insurable risk of a building. The insurance company concerned can thus assess the aggravation of the risks, determine whether they are acceptable or not, or increase the insurance premium accordingly. A syndicate that does not notify in advance the insurer may be denied payment (in whole or in part) for damages caused by the work. The insurer could even proceed to the cancelation of the insurance contract. On a more positive note, it is reassuring to know that a majority of insurers will not object to the work being carried out. They will rather offer an extension of coverage to the insurance policy of the syndicate.

Contractor’s liability insurance

Once the insurer is informed of the proposed work in the co-ownership, the syndicate must require the contractor retained to execute the work (large or small) to carry civil liability insurance in the event that bodily injury or damage are inflicted to others. And even before he starts working, he should provide evidence of having subscribed thereto. This insurance should include a sufficient amount of coverage. Remember that the civil liability insurance of the contractor is complementary the insurance of the syndicate.

Furthermore, it is in your syndicate of co-ownership’s best interest to verify, prior to the award of a contract to a contractor, that the contractor names the Syndicate as an additional insured on its civil liability insurance policy. In case of a loss, the insurer of the contractor should then hold harmless and defend the syndicate. Be aware that generally, this type of coverage provides that in the event of a termination or a change to the policy, the additional named  insured must be notified by means of a written notice, within 30 days before the entry into force of such termination or modification.

Construction Insurance

In the event of any work of some importance, the syndicate should also verify that the contractor holds construction insurance. It offers protection against risks that could cause damage to the work being carried out, and also to the materials and supplies used on the construction site, including temporary works (e.g. Access ramps and fencing). This insurance product usually covers losses or damage caused by fire, explosion, theft or water damage, and this for the full value of the work. It starts from the opening of the worksite and usually ends with the acceptance of the work.

In the event of a major project that requires an investment of several hundred   thousand dollars, construction insurance must be subscribed both for the benefit of the contractor and of the syndicate concerned.  In the event of a claim, the indemnities would be paid to both parties.

Please be aware that if the proposed work requires the installation of pressurized   mechanical equipment (central gas system), ventilation or air conditioning,  an equipment  breakdown (boiler and machinery)”construction”  insurance, including commissioning and testing should also be subscribed.

 WHAT YOU SHOULD KNOW! In a co-ownership in phases , the initial co-ownership should also be covered by  construction  insurance when work in the common portions needs to be completed such as , for example work  related to   the construction or the enlargement of the underground parking, swimming pool or driveways.

WHAT TO KEEP IN MIND: Whatever the nature of the work undertaken, it is essential that the Syndicate notifies its insurer, who will then be able to evaluate the situation and react accordingly. In addition, once the work is completed, the syndicate is responsible to adjust its insurance coverage taking into account the added value the work has given to the building.

 WARNING! Before hiring a contractor, make sure he holds civil liability insurance covering damage and accidents   inflicted on others, as well as construction insurance. He should be able to demonstrate it by supplying to you with an insurance certificate.

 

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