Question: Our units recently received hail damage. Two lots opted for a cash settlement from the insurance but have not done the repairs. How do we ensure they repair the damaged property?
Our insurance cover allows lot owners to receive a cash settlement for their claims. All six units in our class B building were recently damaged in a hail storm. Two of the units opted for a cash settlement of their claim. The damages are not that extensive. The lots are liveable, and some repairs are cosmetic.
These two units with cash settlements have not carried out any of the repairs listed in their scope of work. Are the damaged but unrepaired parts of their units still insured?
We like these owners to use the cash settlement to carry out the repairs as agreed in our insurance claim process and not risk our insurer refusing to cover these two and possibly all six units. What could the OC do to get the repairs carried out?
Answer: The owners’ failure to rectify the damage can impact insurability for the whole complex.
Insurance policies will contain exclusions for unrectified damage associated with a previous claim and will usually extend to any damage resulting from a failure to repair property after a claim.
The owners’ failure to rectify the damage can also impact insurability for the whole complex, as you need to disclose all things relevant to the insurer’s decision to insure you. This can include any unrepaired damages.
Regarding repairs within individual lots, the responsibility typically falls on the lot owner to undertake repairs. You may have specific bylaws or rules regarding maintenance and repairs covering this. In the absence of such bylaws, the owners corporation may have limited authority to require a lot owner to make repairs to their lot.
With the above in mind, I recommend you contact the owners of the two units that opted for a cash settlement. Express your concerns regarding the importance of repairing the damages and emphasise that the repairs are necessary to maintain insurability for the complex.
If this does not get a satisfactory outcome, you may refer a strata dispute to ACT Civil and Administrative Tribunal (ACAT) or seek legal advice.
Tyrone Shandiman Strata Insurance Solutions E: tshandiman@iaa.net.au P: 1300 554 165
This information is of a general nature only and neither represents nor is intended to be personal advice on any particular matter. Shandit Pty Ltd T/as Strata Insurance Solutions strongly suggests that no person should act specifically on the basis of the information in this document, but should obtain appropriate professional advice based on their own personal circumstances. Shandit Pty Ltd T/As Strata Insurance Solutions is a Corporate Authorised Representative (No. 404246) of Insurance Advisenent Australia AFSL No 240549, ABN 15 003 886 687.