This article discusses burst pipe insurance responsibility by explaining how flood damage from a burst pipe can be split between contents insurance and strata insurance for different parts of a unit.
Question: A burst pipe flooded a unit and damaged contents. Removal of the carpet uncovered magnesite flooring. Who pays for what?
A lot owner had a burst pipe from their washing machine which flooded the unit. Contents insurance has covered the carpet removal and damage to furniture. Underneath the carpet was magnesite flooring. Apparently, this falls under strata. Will the strata and owners corporation deny the claim of removal? It’s a very grey area.
Answer: Where there is damage to both building & contents, a claim must be made on both the contents and the strata policy
In instances where there is damage to both building & contents, a claim must be made on both policies (contents & strata).
Lot owners should have contents/landlords insurance with a reputable insurer to cover property not insured by the strata policy and the basic principle is that property inside a unit should be covered by either the strata insurance or contents insurance.
In this instance, contents insurance will cover damage to carpet, but magnesite flooring that is a permanent fixture will be considered building and therefore claimable under strata insurance.
Generally speaking, a lot owner who has contributed to insurance premiums for a policy covering property they own can demonstrate an insurable interest in the policy and therefore is able to make a claim.
Where a claim is made, it falls on the insurer to either settle the claim less the excess or demonstrate the event that caused the damage or the property itself is not covered by the policy.
This post appears in the September 2021 edition of The NSW Strata Magazine.
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.
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