Question: Where in the legislation does it state that the Owners Corporation is responsible if the event is insurable but no valid claims can be made because the invoice is under the insurance excess?
Where in the legislation does it state that the Owners Corporation is responsible if the event is insurable but no valid claims can be made because the invoice is under the insurance excess?
Our understanding of UTMA2011 is that if the invoice is under excess there is no valid insurance claim. No claim this no excess, thus the Owners Corporation have no business in paying.
The strata company is now saying that they can consult with the insurance company and then the committee can decide to pay the invoice using the general fund. Can the Committee decide to pay for invoices using the general fund for work on private property without any insurance claims? I can seem to find anything about these “insurance under excess” claims.
The reason why we became concerned is that a very noticeable non-insurable event was mentioned in a meeting in 2020. Since then, we are very concerned with how the Committee members may be using this as an excuse to use general funds. We have attempt to question the present and past insurance companies and also the insurance broker on how they decide whether it is insurable.
To summarise the response I received from all groups, I would say that unless there is a claim where all these invoices go over the excess and become a valid claim, the insurance companies and brokers know nothing unless there is a claim. The strata company claims that the insurance company are the one that states it’s payable but no evidence is ever provided.
I was wondering if there is any part of the legislation that allows the general fund to be used this way.
Answer: My view is that the lot owner (or member) can still make a claim on the insurance in the event that the claim is less than the excess.
See paragraphs 50 – 66 of the ACAT decision: ACT CIVIL & ADMINISTRATIVE TRIBUNAL
In the light of the decision above, my view is that the lot owner (or member) can still make a claim on the insurance in the event that the claim is less than the excess.
While the excess will need to be paid by the owners corporation, members making insurance claims should be aware that Section 31 of the Unit Titles Management Act enables an owners corporation, where it has incurred an expense or carried out work that is necessary because of—
- a wilful or negligent act or omission of a member of the corporation, or an occupier of the member’s unit; or
- a breach of its rules by a member of the corporation, or an occupier of the member’s unit,
to recover the amount spent or the cost of work from the member as a debt.
Christopher Kerin
Kerin Benson Lawyers
E: enquiries@kerinbensonlawyers.com.au
P: 02 8706 7060
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