This article discusses water damage claim impact on premiums and when it may be better to fund repairs instead of claiming.
Question: If our insurance company pays out our water damage insurance claim, will they put our premium up to cover their payout costs? Should we avoid making a claim and fund the repairs ourselves?
Answer: There are some instances where an owner or body corporate will decide it’s not commercially viable to lodge a claim.
The short answer is that it depends on the claim itself. What is the amount of the claim? How many other claims have you had? If it’s a one off $500 water damage claim and you haven’t had another claim in the last five years, it is unlikely to impact your claims history.
If it’s a significant claim, it is likely to affect your claims history and your premium. If you’ve had a series of claims, some insurers will not cover you. It does differ from insurer to insurer as to as to how this will apply.
Check with your insurer or broker on the specific circumstances related to your policy and the claim as well.
We do advise some lot owner and Body Corporate clients not to make a claim where it’s only a few $100 because it costs the insurer more to administer the claim than what they pay out.
When it starts to become a significant claim, it can be a commercial decision of a body corporate to step in and pay for the repairs. I think there can be an argument that the body corporate cannot pay for repairs inside a lot, so that’s also another consideration with regard to water damage claims. There are some instances where an owner or body corporate will decide it’s not commercially viable to lodge a claim particularly where a body corporate is trying to improve its claims history.
This post appears in Strata News #527.
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.