Question: Common property water ingress in my ground-floor apartment resulted in damage. If common property issues caused the damage, shouldn’t the owners corporation pay the excess?
Common property water ingress in my ground-floor apartment resulted in damage. Two issues caused the ingress and the owners corporation has agreed to repairs. I paid two insurance excesses for two issues, which cost $1500 and will probably increase my insurance premium. Shouldn’t the owners corporation pay the excess because common property issues caused the water ingress?
Answer: Most insurance policies carry a subrogation clause which transfers the right of recovery from the insured to the insurer.
There are several issues noted here:
In most states, the acts enforce the provision that the common property be maintained. Where the maintenance is lacking, the owners corporation may be held responsible for the resultant damages and required to repair the issues found. Where the resultant damage is also covered by an insurance policy, the lot owner can lodge a claim.
As to the normal policy provisions, the insurer would normally be entitled to request an excess for each proximate cause or event, not each issue.
For example: if a storm occurred and the subsequent water damage is found to be from two issues with the building, this is still one event (the storm), and as such, one excess would apply.
Most insurance policies also carry a subrogation clause, which transfers the right of recovery from the insured to the insurer. This means that by contractual agreement (the policy terms and conditions), you are not permitted to recover the excess. Any such recovery is the responsibility of the insurer.
If you continue with the claim and there is a subrogation clause, the recovery of your excess is a matter for the insurer. If they are not planning to seek recovery, then you could seek recovery of your excess.
If you decide not to continue with the claim, we suggest you seek the advice of a properly qualified Strata lawyer: LookUpStrata Directory.
This post appears in the June 2024 edition of The NSW Strata Magazine.
Scott Driscoll Driscoll Strata Consulting E: scott@driscollstrataconsulting.com.au P: 0409 632 003