Question: If a common property unit door is damaged during a break-in, who is responsible for the repairs and insurance excess? The unit owner or the owners corporation?
The front door of our scheme’s common area was broken into and damaged, and then one of the flats was broken into. The lot’s front door is common property. Is the lot owner responsible for the repairs to their door, or is the repair and excess covered under the owners corporation insurance?
Answer: Unfortunately, there is no statutory guidance on this issue in Victoria, so the owners corporation committee may need to make a decision based on what is reasonable in the circumstances.
Malicious damage is generally considered a valid insured event under strata insurance policies. A claim can typically be made for both the damage to the common property front door and potentially the contents or fixtures within the flat, subject to policy terms and limits.
In terms of who is responsible for paying the excess, Victorian legislation is silent on this point. However, precedent and common practice suggest the benefit principle applies. The party that benefits from the claim should bear the cost of the excess.
Where both common property and a lot are affected, there are no hard-and-fast rules. In these cases, the excess may:
- Be shared proportionately between the owners corporation and the lot owner, based on the extent of the damage; or
- Be paid entirely by the owners corporation, particularly where it is the party lodging the claim and the common property is involved.
Unfortunately, there is no statutory guidance on this issue in Victoria, so the owners corporation committee may need to make a decision based on what is reasonable in the circumstances.
To avoid uncertainty in future scenarios, an owners corporation can pass an ordinary resolution to adopt a clear policy outlining how excesses will be apportioned in various claim situations.
This post appears in Strata News #752.
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.
What happens in the case of water damage to an individual apartment due to ongoing entry of water from the exterior OC wall? The individual owner puts in a claim with the OC insurer. The OC insurer accepts the claim for damages for all except the carpet. The individual owner’s landlord insurance however denies the claim for the carpet. Should the OC pay to replace the carpet given the leak was due to OC responsibility for external building defects and maintenance issues?
Hi Anna
This similar Q&A may assist:
Question: A hot water meter from an embedded gas hot water system failed, leaked water onto the corridor carpet and damaged the floating wood floor inside an apartment. Who is liable for the excess?
With respect to insurance, the correct professional to supply an estimated building reinstatement/replacement cost is a quantity surveyor.
Quantity surveyors are registered building practitioners who provide signed estimates of construction costs, i.e., what you’re actually insuring.
Valuers provide property valuations based on the whole property (i.e., including the land) in reference to the current real estate market.
Hi,
I don’t think the question was who would be the most qualified person to provide a quote, but who is liable to pay the excess in the event of a claim.
Hi, I recently purchased one of 3 units in a strata plan (Victoria). When arranging for strata plan insurance, do we split the cost 3 ways equally or is it based on the valuation of each unit? One of the 3 units is double storey and is owner occupied. My unit and the other unit (both the same in size and single storey) are rented out.
kind regards
Irene
Hi Tim,
I subdivided my property into 2 lots and built a new home at the rear. Both homes are on separate titles, and owner occupied. We have our own building & contents insurance. Common property is a shared driveway only. We currently have Strata Insurance for common property and legal liability. The premium has increased by 28% for the coming year. My question is: as both owners have private B & C insurance, which includes public liability, is Strata Insurance really necessary given this is a 2 lot subdivision.
Hi Tyrone. Thank u for all the above information. Our Vic Strata Insurance fees & excess are huge but due to claims history. I rang around wth that history & found private strata insurance to be more competitive. Even non strata. we want the OC manager to source the quotes for all units & charge like they do now but she won’t help unless it’s thru their broker (& gets 28٪ commission). Are we stuck wth choices? The other owners are reluctant to consider anything unless it’s thru the OC manager.
Hi Soulla
I have responded to your comment on this article: VIC: Q&A Insurance Commissions Within the Strata Industry
Hi
If a lot owner makes a claim say for water damage in his property and as a result, the premium increases on next renewal. This water damage can be gradual wear and tear or maintenance issue. So, the overall premium should be shared by all the lot owners or since the increase was due to a claim by a particular lot owner, that portion f the premium should be paid by the beneficiary of the claim?
Hi Anjali
I have responded to your question in the above article.
Kind Regards
Tyrone Shandiman
Hi
Can I take out my own insurance?
I live in a block of 4 units unattached and we only share a drive way, for sanity sake I need to no longer be apart of the group, renewal due soon please help
Hi Jtp
This article should assist: VIC: Q&A Individual Strata Insurance for a Small Owners Corporation
in a large complex a tenant left stove on resulting in sprinklers being activated completely ruining apartment and two underneath OC committee immediately made a claim for damage [$400000] on building insurance policy
1. Is this correct or should negligent tenant or owner be forced to pay Owner paid excess on building claim
2.As a result of this large claim total building insurance premium has increased by $30000
O C Committee proposes that all owners share cost of increased premium
This does not seem reasonable as all owners are being required to pay costs as a result of another residents negligence Should owner of apartment where negligence took place be required to pay this increase of $30000 [tenant has since vacated]
Hi Morris
As this is an interesting question we have provided a lengthy response in the post above.
Hi
we need a quote of body corp insurance for 8 houses in Templestowe vic
Regards
Baghaki
Hi Baghaki
Thanks for your request. I’ll have someone contact you to discuss.
Nikki
LookUpStrata