Our previous tenant caused damage to a neighbouring lot. The OC has billed us for the insurance excess. Why should we pay for damage caused by the tenant?
A previous tenant in our investment property damaged the garage door of the neighbouring lot. The Owners Corp has billed us for the insurance excess. The OC says: "As the damage was caused by the tenant, the owner is responsible for the insurance excess on this claim".
Why should we pay for damage caused by the tenant? We had no idea the incident had occurred until we were contacted by the Owners Corporation.
The owners corporation are within their right to bill the excess to the lot owner.
Section 23A of Owners Corporations and Other Acts Amendment Act 2021 states:
Owners corporation may levy fees in relation to insurance
- An owners corporation may levy a lot owner a fee to cover the cost of any of the following…
- an excess amount or an increased premium resulting from or attributable to an insurance claim, if the claim is caused by a culpable or wilful act or the gross negligence of….
- a lot owner's lessee; or
- an excess amount or an increased premium resulting from or attributable to an insurance claim, if the claim is caused by a culpable or wilful act or the gross negligence of….
In this instance the owners corporation are within their right to bill the excess to the lot owner.
In this instance I would recommend the owner first clarify whether the insurer has undertaken a recovery action against the tenant and if that action was successful. In such instances, the insurer will generally refund the excess less any expenses incurred.
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Tyrone Shandiman is a seasoned professional in the insurance industry having embarked on his journey in 2004 within the financial services sector. In 2011, he established Strata Insurance Solutions, transforming a garage startup into a reputable firm servicing over 900 clients with a dedicated focus on strata insurance. Tyrone's role extends beyond managing operations and tackling complex insurance matters; he also founded the Australian Consumers Insurance Lobby, championing consumer rights within the insurance industry. Notably, his efforts and expertise have been acknowledged with numerous industry awards. Adding to these accolades, Strata Insurance Solutions was recently named an Australian Top Brokerage by Insurance Business Australia Magazine, a testament to the firm's excellence and leadership in the field. Tyrone is a regular contributor to LookUpStrata.
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