Definition : Insurance - Stated amount co-insurance clause

Clause of the insurance contract according to which the insurer institutes, in the event of a partial loss, a level of tolerance in favour of the insured, which will not be penalized if the actual reconstruction cost of the insured property is greater than that declared at the time of the underwriting (under insurance situation).This clause is expressed in a percentage that may vary from insurance coverage to another, but usually fluctuates between 80% and 90%, depending on the coverage in the insurance policy. In the absence of such a clause, or where the amount of insurance declared is less than the minimum amount corresponding to the percentage mentioned in the stated amount co-insurance clause, the insurer could apply section 2493 Civil Code of Quebec, which imposes a 100% proportionnal rule.


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Question: We suffered water damage. Three apartments, including mine, were affected by the breakdown of a water heater. The co-ownership’s insurer refuses to compensate us completely, claiming that our syndicate has paid too low a premium compared to the true risk insured. More specifically, it appears that the directors took out inadequate insurance cover with a reference to a rule proportional to 80%. I do not understand that. Is the insurer right not to fully compensate us?
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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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