Insurance premium

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.

How are the premiums fixed?

The insurance policy is a wager on the future and an assumption of risks assessed by the insurer. The amount of your insurance premiums is, first and foremost, dependent upon the risk covered, taking into account various elements:

• The nature of the risks covered;
• The location of your building;
• The crime rate in your neighborhood;
• The distance between the building, a fire station and a hydrant;
• The presence, nearby, of certain types of businesses, such as a bar;
• The immovable’s destination (residential, commercial or mixed);
• The immovable and movable property replacement value, and their level of maintenance;
• The extent and scope of the guarantees;
• The likelihood of occurrences of damage and their resulting costs;
• The presence or absence of monitoring systems (e.g. fire alarm and fire detection system);
• Your syndicate's claims record with the insurer;
• Other syndicates of co-owners with comparable characteristics claims record;
• The deductible amount. The higher it is, the lower the insurance premium;
• Expenses related to the insurer's operating expenses;
• The insurer’s profit on a policy.

Other factors affect the amount of the premiums, such as the ratio of dwellings leased in your immovable, and its management efficiency.

Insurance premiums increases

A universal rule of thumb governs insurance: premiums increase in proportion to the loss ratio. Several Québec co-ownerships have had to cope with major insurance premiums or deductible increases in recent years. Some syndicates of co-owners have even found it difficult to get any insurance coverage. They were compelled to resort to insurance companies specialized in high or "sub-standard" risks.

This state of affairs results from of the multitude of claims to insurers in recent years, caused mainly by water damage. The situation is such that in general meetings, many co-owners require that measures be taken to stem the problem.

Implementation of efficient management

To counter insurance premiums increases and ultimately to lower them, the Board of Directors must implement a preventive maintenance program for the immovable. Once in place, the Directors will be able to inform the insurers that your co-ownership represents a controlled risk.

Competitive bidding

To obtain competitive insurance premiums, the board of directors must send strictly identical requests for quotes to several insurers.  This makes it possible to avoid favouring one insurer over another and to make "more objective" choices for the protection of the common assets of the co-owners.

Going through an insurance broker is not an obligation. On the other hand, going through a damage insurance broker. specializing in co-ownership insurance is recommended. The latter will serve as an intermediary between the various insurers and the syndicate. Its role is to find the insurance policy whose quality/price ratio is the most advantageous for your co-ownership. For their part, directors will be able to compare the premiums required with those of direct insurers.

WHAT YOU SHOULD KNOW !  A well-managed co-ownership, who has set up a maintenance log and a sufficient contingency fund, is the key to control the cost of your insurance. A damage insurance broker or agent will list the risk factors an insurer takes into account in order to reduce your exposure to these risks and, as a result, to prohibitive insurance premiums.

WHAT TO KEEP IN MIND : ​The co-ownership insurance coverage is best subscribed through a broker or a damage insurance agent. They are, theoretically, competent in this field. They should be able to find the product that will best suit your co-ownership, both in terms of guarantees and premiums.

WARNING ! Insurance premiums are a growing burden in the syndicate’s budget forecast. These increases are the result of co-ownerships aging but also, in some cases, of a lack of maintenance.

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