We received this question from an NSW lot owner asking about unit owners insurance and what it covers.
Table of Contents:
- QUESTION: My car was parked in my allocated parking spot. Storms caused flooding recently and my car has been written off due to damage. Should Strata accept the liability?
- QUESTION: Is the repair of damage from a leaking tap in the wall cavity covered by the unit owners insurance?
Question: My car was parked in my allocated parking spot. Storms caused flooding recently and my car has been written off due to damage. Should Strata accept the liability?
My car was parked in my allocated parking spot. It got flooded over the weekend and my car was under the water for a few hours. In the end it was written off.
It turns out that the storm water pump wasn’t working, and the strata doesn’t have any maintenance report. However, strata are asking me to provide the evidence to their insurance broker to say why I think it should be strata at fault, and they should accept the liability.
Can you please help me out, as I think it should be black and white that it is a strata issue, and they should accept the liability.
Answer: It is our recommendation that a claim is made on the policy where the property is insured. In this case the lot owner’s car insurance.
Where a lot owners property is damaged and the owner believes the Owners Corporation is responsible for the damage, it is our recommendation that a claim is made on the policy where the property is insured. In this case the lot owner’s car insurance.
The benefit in doing so is the car insurer’s primary responsibility is to repair the vehicle. After repairs are completed, they will seek to recover from the owners corporation if they believe the owners corporation are liable. Most car insurers will refund the excess if they are successful in a recovery against the owners corporation.
The other option is to pursue a recovery directly against the owners corporation – we do not recommend this option because:
- You are responsible for the recovery process – including any legal actions that may be required;
- The liability insurer’s primary responsibility it determining liability and this can take time – repairs through car insurance will be much faster as the insurers number one priority is their customer;
- You are responsible for quantifying costs (i.e. getting quotes);
- If the liability insurer can successfully demonstrate the owners corporation are not legally responsible, you need to start the claim process with your car insurer all over again.
If you decide you want to pursue recovery against the owners corporation you will need to submit a letter of demand to the owners corporation. A letter of demand should contain:
- A description of incident and date;
- Why you believe the owners corporation are liable;
- A summary of your costs (such as quotes or invoices for repair);
- Bank Details of where a settlement can be made.
Liability claims are considered on a case by case scenario by insurers, solicitors & judges (if the claim ends up in court). Claims are never black and white and are considered on a case by case basis.
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 Advisernet Australia AFSL No 240549, ABN 15 003 886 687.
This post appears in the December 2020 edition of The NSW Strata Magazine.
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.
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.
This post appears in Strata News #146
Have a question or something to add to the article? Leave a comment below.
- Water Damage Insurance Claims in Strata Properties
- NSW: Q&A Water damage on my ceiling from the apartment upstairs
Looking for strata information concerning your state? For state-specific strata information, take a look here.