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.