Insurance policy 2024-2025: Amendments and adjustments
The Fonds d'assurance responsabilité professionnelle du courtage immobilier du Québec (FARCIQ) has made adjustments and amendments to the insurance policy that will be valid from May 1, 2024 to May 1, 2025. The main aim of these amendments is to clarify the coverage offered by the policy, notably with regard to the exclusions.
Check out your insurance policy in the Licence Holders Area under the "My insurance policy" section and the Notice of amendments describing all the changes made.
Here are the main amendments to the insurance policy:
Cyber risks
The rapid development of new technologies, the proliferation of cyber attacks and the increased use of IT tools pose significant risks to the industry and represent potential sources of claims.
However, the risks associated with information technology are essentially operational and are not specific to professional liability. These risks are mainly covered by special insurance policies, or “cyber risk” riders offered by general insurers. For this reason, the professional liability insurance offered by FARCIQ was never intended to protect licence holders against such risks.
In this context, FARCIQ has added a new exclusion (2.03 w) to clearly and specifically exclude cyber risk claims from coverage.
However, you must be vigilant when it comes to managing and storing the information and data1 you obtain in the course of your professional activities. Adopt better practices by reading these articles:
- Electronic document management (EDM) of agencies and brokers acting on their own account
- Policies governing the protection of personal information
- Actions to be taken to comply with Bill 25 (personal information)
- Guideline – Privacy protection
Copyright infringement
Copyright infringement, such as unauthorized use of photographs when marketing a property, is not without consequences. The Copyright Act provides that the damages awarded in the event of such infringement arise from a penalty clause and constitute statutory damages that cannot usually be equated with compensatory damages. Section 2.03 b) of the insurance policy already provides for an exclusion for this type of damages. For the sake of clarity, the new insurance policy adds clause 2.03 u) that formalizes this exclusion of copyright infringement, as well as infringement of intellectual property, trademark, free competition or any misappropriation of the rights or ideas of a third party,
Illegal practice of professional activities outside of Québec
To respond to the new market realities and opportunities offered by telecommuting, FARCIQ has amended section 1.01 concerning the definition of professional activities by eliminating the notion stipulating that the fault must be committed within the boundaries of the province of Québec. The connecting factor provided for in the insurance policy will henceforth be limited to the practice of the activity of real estate broker as the holder of a licence issued by the OACIQ.
This does not mean that licence holders will be covered if they engage in professional activities outside of Québec where a licence to practise is required by that other jurisdiction. Therefore, claims arising from actions taken in violation of any legislation governing the real estate brokerage practice outside of Québec are excluded from the coverage under section 2.03 v) of the insurance policy.
Certain exclusions already apply to territoriality and will continue to apply. For a property located in Québec, the insurance policy will apply only if the recourse is brought before a Canadian court and the services, opinions or advice on which the claim is based arise from the practice of professional activities. In the case of a property located outside of Québec, a recourse must imperatively be brought before a Québec court and other conditions must also be met for the policy to be applied, as mentioned in the policy. That is why we recommend that you insert standard clause 1.9 in your contracts for transactions involving a property located outside of Québec.
Broker's interest in the immovable
An amendment has been made to the insurance policy to take into account the applicable conflict of interest rules. Claims arising from a real estate brokerage transaction involving a property or right in which an insured has or may have, directly or indirectly, any interest whatsoever, notably as a buyer, seller, creditor, shareholder or surety, are expressly excluded. This amendment was made because, in the past, the insurance policy required the broker to hold an interest of more than 10% in the property or right. To avoid any issues in such a situation, we suggest that you appoint a real estate broker to represent you during the sale or purchase of an immovable in which you have or will have an interest.
Increasing deductible
An increasing deductible mechanism has also been added and will apply to insureds who have more than one claim with compensation within a 3-year period.
The aim of this mechanism is to impose an additional financial contribution on insureds who commit repeat offences, and are more at risk, in the event of claims where their professional liability is incurred. Given the raison d'être of FARCIQ, this preventive measure will help raise insureds' awareness of the importance of implementing good professional practices to limit the risk of claims.
Although these cases are infrequent, only insureds with more than one claim for which compensation has been paid within a 3-year period will see their deductible fluctuate as follows:
The first deductible remains at $2,500. It will increase to $5,000 from the second claim for which compensation has been paid. It will then rise to $7,500 for subsequent claims for which compensation has been paid during the 3-year reference period. This period begins on date on which the claim is submitted to FARCIQ or the date on which the notice should have been given to it.
Only claims received after May 1, 2024 will be considered by the increasing deductible mechanism. It should also be noted that claims for which FARCIQ does not pay out any compensation will not be included in the claims history and will therefore not increase the deductible.
We remind you that to be able to benefit from the insurance coverage as insureds, you are required to report any claim to FARCIQ, regardless of its amount. Reporting a claim will enable you to be assisted by FARCIQ's specialized team, which will be able to advise you on your professional liability. In such a scenario, it is important not to admit liability or undertake to assume any costs before contacting your insurer.
For any questions about your insurance policy and professional liability, please contact FARCIQ by phone at 1-866-956-5959 or by email at assurance@farciq.com.
Prevention is your best solution!
1 Data: Any representation of information, regardless of the medium on which it is stored.
