Should our strata policy keep paying for owners’ water leaks?

One of the important things to understand about strata insurance is that when you purchase a property within a strata scheme, you are effectively buying into the collective claims history of the building. Claims made under the strata insurance policy can affect the premiums paid by all lot owners, regardless of which lot the claim originated from.

It is also important to distinguish between responsibility for the cause of damage and what is covered under the insurance policy. For example, while a water leak may originate from a fixture within an individual lot, the resulting damage may still be covered under the strata building insurance policy, provided the claim falls within the policy’s terms and conditions. The fact that an owner may be responsible for maintaining a particular fixture does not necessarily mean the resulting damage should be excluded from the strata policy.

Each claim needs to be considered on its individual circumstances, including the cause of damage, the property affected and the applicable policy wording.

It is also worth noting that where a strata scheme has experienced significant or frequent claims, insurers will often respond by imposing higher excesses, additional policy conditions or restrictions on cover. In some cases, these excesses can be so high that making smaller claims becomes impractical. This is one way insurers seek to manage ongoing claims exposure.

The circumstances you have outlined are quite complex and probably go beyond what can reasonably be addressed through this forum without reviewing the policy and claims history in detail.

Given the substantial increase in premiums, I would suggest that the committee consider obtaining an independent opinion from an alternative specialist strata insurance broker, if this has not already been undertaken. A review could help determine whether the current insurance arrangements remain appropriate and whether there are opportunities to better manage the scheme’s claims exposure and insurance costs.

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 and the specific coverage afforded under their policy wording. 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.