Definition : Insurance - Insurance premium

October 3, 2021 - When it comes to determining the insurance premium based on the insurance value of a building (for insurance purposes), the broker or insurer will require his client to provide the cost of "reconstruction". Indeed, this premium is established according to the risks which are attributable to the building and the premises, but also according to the cost of reconstruction. We obviously understand that after a disaster we have to rebuild the damaged places, but the concept goes far beyond reconstruction. Indeed, the cost of reconstruction is impacted by contingencies and difficulties in restoring the inventory to its original condition. Think for example of the work involved in replacing a broken ceramic tile, on the wall or the floor, it goes without saying that this also involves the replacement of other tiles around, damaged by the work.  

Les copropriétés qui perdent leur assureur ne sont plus des cas isolés. Si la plupart d'entre elles parviennent à en trouver un autre pour recadrer le risque, les primes et les franchises n'en demeurent pas moins substantielles.

Almost every insurance policy includes deductibles, the amounts of which vary depending on the risk insured. For example, the deductible for water damage is usually higher than that for fire. The amount of the deductible will be deducted from any compensation paid. Its purpose is to make the insured responsible, by making him take charge of part of the repairs of the damage caused by the disaster.  The advantage for the syndicate is to see its premium reduced. In co-ownerships, deductibles are a factor in the Building insurance, and in the third party liability insurance of the syndicate, directors, meeting officers, co-ownership manager and of the condo manager. 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.

The insurance premiums are the amount paid by the insured monthly or annually to benefit in the event of a claim from the guarantees in the insurance policy. It is an expense towards the preservation, maintenance and administration of the immovable. Although the syndicate assumes this cost, it is charged back to the co-owners as a portion of their common expenses (condo fees). However, in recent years, there has been an increase in the amount of insurance premiums for most syndicates of co-owners. Two main factors are at issue: the general ageing of this stock of collective dwellings and the increase in claims caused by the failure to carry out maintenancework  on the building.  But the complexity of the insurance system also has its share of responsibility.

The additional premium is a premium that is added to the existing premium. It results from a worsening of the risk or from the assumption of a new risk. This additional premium may be imposed during the course of a contract or upon its renewal. Risks are analyzed according to scales that are specific to each insurer. Ultimately, the syndicate will pay this additional premium, which will be charged to all of the co-owners through the common expenses (condo fees) or, at times, some of them.

The concept of water damage refers to the damage caused to property by the action of water: it can be a pipe that bursts because of the frost, the drain pipe of the washing machine that breaks or the bathtub that overflows. Often impressive, water damage is probably the most recurrent problem in co-ownership. As proof, over the past ten years, the proportion of this type of loss has more than doubled. They thus represent the first cause of loss. They are also becoming more and more expensive, whether for syndicates or their insurers. In order to manage the consequences of water damage upstream, you will find below sub-sheets dealing with this issue.    

Water damage is the leading cause of loss in co-ownership. They are also becoming more and more expensive, whether for syndicates or their insurers. And this is not surprising since the potential causes of loss are numerous. Over the past decade, the proportion of water damage has more than doubled in co-ownership.  In order to limit the extent of damage caused by water leaks, water leak detection systems have been created to detect any abnormal amount of water on the floor. This type of system also ensures the automatic closing of the main water inlet of the apartment. The objective is to be able to stop the source of water supply as soon as a leak is found.

The syndicate's insurance does not cover everything, for example, deductibles and exclusions . This is the case for certain types of risk, such as ground movements. This means that not everything that is earthquake and its consequences are automatically covered. To get better coverage, you can subscribe complementary riders to the insurance policy. Clearly, the so-called complementary insurance is intended to increase - by increasing the basic premium - the insurance cover and the ceiling of the indemnities that can be paid. Here are some examples of complementary and optional coverage (guarantee):