Insurance Refusal for a Quebec Syndicate: Solutions

An insurer that refuses to insure a syndicate places the divided co-ownership in a major risk zone. “Quebec syndicate insurance refusal” often occurs after repeated claims, uncorrected deficiencies or governance deemed inadequate. Here is a practical guide to understanding the reasons, acting quickly and getting your condo back on track toward viable coverage, in Montreal and throughout Quebec.

Why an insurer refuses to insure a syndicate

Insurers assess the building’s overall risk and the syndicate’s management capacity. A refusal generally occurs when one or more factors combine:

• Frequency and severity of claims (recurring water damage, fire, chronic infiltration, sewer backup).
• Major unresolved deficiencies (a roof at the end of its service life, galvanized plumbing, deteriorated concrete or balconies, deficient security systems).
• Non-compliance or inadequate maintenance of the common portions, and no structured maintenance plan (maintenance logbook / contingency fund study).
• Inadequate insured value, an outdated estimate, or a lack of reliable information about the condition of the components.
• Weak governance: delays in making corrections, an insufficient budget, an underfunded contingency fund, and decisions not documented in the board of directors’ minutes.

An insurer may also refuse to renew if it has not received an up-to-date and convincing file (technical reports, proof of corrections, quotes, photographs, a work schedule and financing plan). Without this narrative demonstrating risk control, the market will often conclude that the risk has increased.

Legal obligations of the syndicate and risks for the board of directors

In Quebec, the Civil Code of Quebec requires the syndicate to maintain insurance covering the building and the common portions, in accordance with usual market standards (see, in particular, section 1073 C.C.Q.; source: LégisQuébec). The syndicate must also comply with its declaration of co-ownership and the by-laws of the immovable, which often specify insurance obligations, deductibles and requirements applicable to co-owners concerning their private portions.

Since the recent reforms, the allocation of certain damage and the deductible are governed by specific rules (see section 1074.1 C.C.Q., to be interpreted together with the declaration of co-ownership and case law). If the obligation to insure is breached, the syndicate and, in some cases, the directors may face legal proceedings. The board of directors must therefore demonstrate that it is acting prudently, diligently and transparently: decisions recorded in the minutes, notices to co-owners, calling an annual general meeting or special meeting when necessary, and clear accountability.

Useful resources:

• LégisQuébec – Civil Code of Quebec (sections 1073, 1074.1): https://www.legisquebec.gouv.qc.ca/fr/document/cs/CCQ-1991
• RGCQ – Best practices in co-ownership insurance: https://rgcq.org/

First steps after an insurance refusal

Time is working against you. Act methodically to reopen doors in the market:

1. Obtain the insurer’s reasons in writing. Distinguish technical refusals (missing information) from refusals related to the risk (claims, deficiencies).
2. Call an emergency board of directors meeting and record the decisions in the minutes. Appoint someone responsible (the condominium manager or president) for the insurance file.
3. Work with a broker specializing in co-ownerships. Ask for a risk-placement strategy, including approaching specialized insurers if necessary.
4. Build a strong file: an inventory of claims and corrective measures, technical reports, the contingency fund study and maintenance logbook, before-and-after photographs, a work schedule and budget, and internal policies (plumbing, water heaters, prevention, emergency access).
5. Immediately implement high-impact risk corrections (e.g., replace water heaters at the end of their service life, install leak detectors, maintain roof drains).
6. Prepare a financial plan: provisions for the deductible, adjustments to common expenses, or a targeted and justified special assessment.
7. Communicate factually with co-owners: the issues, steps, schedule and possible financial impacts. Avoid minimizing the risk; focus on transparency and mobilization.

Governance tip: include with the file the board of directors’ resolution adopting an action plan and authorizing the broker to approach the market. A clear structure reassures underwriters.

For assistance with preparing a file, see our financial and administrative management services: https://www.multirent.ca/services/#gestion-financiere and https://www.multirent.ca/services/#gestion-des-operations

Reducing risk to become insurable again

Insurers look for signs that risk is being controlled. Show that the syndicate is quickly shifting toward prevention:

• Water and plumbing: map the plumbing stacks, replace critical pipes and valves, implement a policy requiring water heaters to be replaced at a specified age, and install detectors and automatic shut-off valves in high-risk units.
• Roof and building envelope: maintain drains, inspect after weather events, and proactively repair joints, flashings and membranes.
• Fire safety: inspect sprinklers, extinguishers, alarms, emergency lighting and exits; update the records and maintenance contracts.
• Access and response: establish an emergency plan, post emergency numbers, and maintain master keys and access protocols for contractors.
• Maintenance logbook / contingency fund study: update the study, prioritize interventions, and align the work plan with the budget and contingency fund.
• Licensed contractors: require proof of a Regie du batiment du Quebec (RBQ) licence and liability insurance, and keep the certificates.

Resource: RBQ – Information and verification of licensed contractors: https://www.rbq.gouv.qc.ca/

Also consider behavioural prevention: internal policies governing renovations in private portions (deadlines, protection, notice to the syndicate), mandatory appliance maintenance (filters, flexible hoses), and information for new co-owners at the time of sale.

Negotiating coverage, deductibles and the budget responsibly

Coverage is about more than the premium. Align your choice of coverage with your risk profile and financial capacity:

• Deductible: increasing it may make the risk insurable and reduce the premium, but requires setting aside funds for the deductible in the budget.
• Essential coverage: replacement-cost coverage for the building, the syndicate’s civil liability, business interruption (if applicable), and protection against theft and vandalism affecting the common portions.
• Reports and values: update the reconstruction-cost estimate; an accurate value avoids underinsurance and penalty clauses.
• Specialized market: if necessary, your broker can approach specialized insurers; provide the most complete documentation possible.

Table – 90-day action plan for becoming insurable again:

To equip your board of directors, also consult our blog: https://www.multirent.ca/blogue/

Governance, finances and communication with co-owners

The heart of the matter is trust. Insurers want to see solid governance and realistic finances:

• Documentation: maintain a clear audit trail (reports, quotes, photographs, contracts, minutes).
• Budget and common expenses: reallocate expenses, increase contributions if necessary, and consider a special assessment for structural corrections.
• Contingency fund: align it with the contingency fund study and maintenance logbook; planning major replacements reduces the risk of claims.
• Meetings: when necessary, call a special meeting, present the action plan and submit the required resolutions.
• Declaration of co-ownership and by-laws: check the consistency between your internal policies and the declaration of co-ownership; adapt your practices to reflect the reality of the insurance market.

Useful external resources:

• LégisQuébec – Civil Code of Quebec (legal framework for co-ownership): https://www.legisquebec.gouv.qc.ca/fr/document/cs/CCQ-1991
• RGCQ – Tools and training for directors: https://rgcq.org/

FAQ – frequently asked questions

• Can a co-ownership operate without insurance?
  No. The C.C.Q. requires the syndicate to insure the building (see section 1073 C.C.Q., LégisQuébec). Operating without coverage exposes the co-ownership and the board of directors to significant risks.
• What if only one quote is available, with a very high premium?
  Reassess the deductible, intensify short-term prevention measures, and ask the broker to revisit the market once corrective measures have been documented. An updated file may improve underwriters’ appetite.
• Who pays the deductible, and how is the damage allocated?
  This depends on the factual circumstances, the declaration of co-ownership and the rules of the C.C.Q. The allocation is governed by specific rules, including section 1074.1 C.C.Q. Obtain legal advice if necessary.

This article provides general information and does not constitute legal advice. Consult a lawyer or notary regarding your situation.

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