We received this question from an NSW lot owner asking about unit owners insurance and what it covers. The following response has been provided by Whitbread Insurance Brokers.
Question: Is the repair of damage from a leaking tap in the wall cavity covered by the unit owners insurance?
We live in a unit on level two of a Strata property. In the main bathroom, there appears to be a leak in the pipe in the wall cavity of the shower recess. The wall with the pipe is a non-common wall and therefore we understand it should be the responsibility of the unit owner to repair.
The leak has caused the ceiling in the bathroom of the unit directly below to collapse.
Both of these units are rented to tenants, and the water damaged ceiling in the unit below was seen during the real estate agents 3 month inspection but never reported to the owner. There is significant rising damp looking damage to the wall in the unit with the leaky pipe, also not reported to the unit owner.
My questions are:
- Is the repair and damage covered by the unit owners insurance? If not, we are talking probably $5000 total the unit owner with the leaky pipe has to pay.
- Does your average unit owner’s insurance policy normally cover this?
- What are the managing agents doing when they carry out 3 month inspections … why are they not reporting these defect issues to the Strata Manager for rectification?
Answer: Owners of strata units have a duty of care under the insurance policy to make sure that events such as the one explained above are attended to ASAP in order to limit the amount of damage
- Generally speaking pipes form part of the strata building, and therefore may be lodged as a claim on the Strata Insurance policy. However, depending on what has actually caused the leak and subsequent damage, we aren’t able to categorically determine here whether the associated repair costs would be covered under a Strata Insurance policy a unit owners insurance policy.
Below we cover information that may assist in reaching an outcome:
If it hasn’t occurred already, the Strata Manager first needs to investigate the cause of the leak. While a leaking pipe could indeed be the likely culprit, an incorrectly sealed or damaged water membrane in the shower recess could also cause damage of this nature. It is also possible for the leak to be a result of general wear and tear.
Most policies exclude building defects, maintenance and general wear and tear as grounds for a claim and therefore if the cause is due to this, there would be no cover under the Strata Insurance policy for replacement of the pipe or shower membrane.
However, if exploratory work has been performed, and the cause is not general wear and tear or defective building items, then it is likely in this instance that the Strata Insurance policy will cover repairs for the pipe and resultant damage to the building.
Note: Most Strata Insurance policies feature a policy limit for replacing pipes, however, please refer to your specific policy wording to understand what applies in this particular instance.
With respect to the water damage caused to the walls and ceiling, this is generally covered by the Strata building Insurance policy. Please note however that the policy won’t respond until confirmation is supplied that the cause of the water damage has been repaired. This ensures that no further damage is likely to occur.
Owners of strata units have a duty of care under the insurance policy to make sure that events such as the one explained above are attended to ASAP in order to limit the amount of damage.
- A unit owner who is renting out their property should typically hold Landlord Insurance. Landlord Insurance policies are designed to cover the owner for fixtures and fittings inside the unit. A Landlord Insurance policy, however, would not generally cover repairs to any item considered to be part of the building, for example, damage to the ceiling and walls.
- With regards to part 3 of the question, we suggest you refer to the Strata Manager. It is important building defects are reported to the Strata Manager promptly in order for issues to be addressed.
This post appears in Strata News #146
Please note this Q&A response is not intended to be personal advice and you should not rely on it as a substitute for any form of advice. Please contact Whitbread Associates Pty Ltd ABN 69 005 490 228 Licence Number: 229092 trading as Whitbread Insurance Brokers for further information.