QLD: Q&A Body Corporate Emergencies – Flooding, Storms

William Marquand, Tower Body Corporate

2 years ago

These videos and Q&As were developed to assist body corporate committees affected by flooding emergencies in Queensland – Cairns, Brisbane, the Gold Coast, Sunshine Coast, etc. What can buildings do to assist with recovery now and what steps can you and your body corporate take to protect your building from future weather events or emergencies?

Table of Contents:

QUESTION: Can our committee cancel our flood insurance? Although we haven’t had a flood event in almost 18 years, there is a nearby tidal creek and wetland area.

QUESTION: During severe weather, a fence between our lot and common property was damaged. Why have we been asked to pay 50% of the excess?

QUESTION: How regularly should we be reviewing our flood cover with respect to current market changes and escalating building costs to mitigate risk? Is this considered under flood cover?

ARTICLE: Helping Your Body Corporate Deal with an Emergency Like Flooding

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Question: Can our committee cancel our flood insurance? Although we haven’t had a flood event in almost 18 years, there is a nearby tidal creek and wetland area.

Our committee is considering cancelling our flood insurance coverage.

Although there has not been a flood event in almost 18 years, the complex has a nearby tidal creek and wetland area on one boundary and a wetland area on another boundary.

Can the committee make this decision, or is it a restrictive issue requiring general meeting resolution?

Answer: If the body corporate has any recognised risk of flooding and can obtain flood insurance, it is obliged to have flood insurance irrespective of the costs of that insurance.

This is a common issue as many insurance premiums for bodies corporate have increased when they are considered at risk of flood. Committees then consider reducing the coverage under the insurance policy to reduce the premium costs.

The body corporate has various insurance obligations pursuant to the module, which includes (when a builder format plan) each building included in the scheme for damage and reinstatement.

Damage is defined to include any damage from earthquake, explosion, fire, lightning, storm and water.

There are mixed adjudications on whether flood insurance is required – i.e. whether it amounts to water damage.

For example, in Beach Meet [2018] QBCCMCmr 39, the adjudicator relevantly provides (in circumstances where flood insurance could not be obtained):

The fact is, it is not a legislative requirement that flood cover be obtained and in any event, flood cover is not available for the scheme at the present time in the present circumstances.

However, in Winnipeg Grange [2013] QBCCMCmr 278 the adjudicator relevantly provides:

Section 110 of the Small Schemes Module states that damage means, among other things: “… lightning, storm, tempest and water damage …” While flood is not specifically mentioned I am satisfied that “water damage” covers damage from water in different ways and includes flooding…

I am satisfied that it is unreasonable for the body corporate to fail to obtain flood insurance in an area recognised as a flood risk.

Accordingly, my view is that if the body corporate has any recognised risk of flooding and can obtain flood insurance, it is obliged to have flood insurance irrespective of the costs of that insurance.

Even if there was not a flood obligation, and there was a risk of flooding, it would be foolish for the body corporate not to have flood insurance given the impact and remedial costs if a flood were to take place.

Todd Garsden Mahoneys E: tgarsden@mahoneys.com.au P: 07 3007 3753

This post appears in Strata News #685.

Question: During severe weather, a fence between our lot and common property was damaged. Why have we been asked to pay 50% of the excess?

A dividing fence between our lot and common property was damaged during the severe weather over SEQ in Dec 2023.

Our fence contractor assessed and quoted the damage.

Our strata management has informed us that our complex has insurance coverage for storm damage, however, we would need to pay 50% excess. Is this usual? If so, is it based on:

the contract between the body corporate and the lot owners?

the community management statement (CMS)?

the insurance policy?

Answer: Such circumstances typically arise when the owner’s actions or negligence directly contribute to the damage.

Under the Body Corporate Management Act Regulations (Regulations), it is stipulated that “For an event affecting 2 or more lots, or 1 or more lots and common property, the body corporate is liable to pay the excess unless the body corporate decides it is reasonable in all the circumstances for the excess to be paid for by the owner of a particular lot, or to be shared between owners of particular lots, or between the owner of a lot and the body corporate, or between owners of particular lots and the body corporate.”

In the scenario described, where the damage involves a fence that is the responsibility of both the lot owner and body corporate (common property), the regulations suggest the body corporate should bear the excess. However, an exception can be made if there are reasonable circumstances for the lot owner to contribute.

From my professional experience, such circumstances typically arise when the owner’s actions or negligence directly contribute to the damage. A common example is when an owner neglects proper maintenance of their property, contributing to the incident. In such cases, they may be expected to either fully or partially cover the excess. It’s crucial to emphasise that deviations from the standard guidance of the Regulation are not ordinarily based solely on property ownership.

In your specific case, I would advise the lot owner to point the committee to the excess section of the Regulation and request the committee clarify the ‘circumstances’ they believe justify divergence from the guidance under the Regulation.

Should the matter be referred to the Body Corporate Commissioner, it is my view they will base their decision on whether the decision was reasonable in the circumstances.

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.

This post appears in Strata News #681.

Question: How regularly should we be reviewing our flood cover with respect to current market changes and escalating building costs to mitigate risk? Is this considered under flood cover?

Answer: If there has been a flooding event in your area since the last review, there might be cause for a review.

The main thing you’ve got to understand is whether there is flood exclusion in your policy. In terms of how often you should be considering your flood cover, that depends on a case by case scenario.

If you’ve been on the committee for 10 or so years and you looked at the flood exposure years ago, there may have been no changes to flooding events in your area. The previous review as it might still be relevant.

Obviously, if there has been a flooding event in your area since the last review, this changes things and there might be cause for a review. Likewise, if you’re a new committee member or a new committee and you don’t know if there has been a review done recently, this is also a good opportunity and a good time to consider whether you need flood cover.

Tyrone Shandiman Strata Insurance Solutions E: tshandiman@iaa.net.au P: 1300 554 165

This post appears in the August 2022 edition of The QLD Strata Magazine.

Article: Helping Your Body Corporate Deal with an Emergency Like Flooding

Our thoughts are with those affected by the flooding on the East Coast. Please stay safe.

Will Marquand, General Manager from Tower Body Corporate is joining me to speak about the event and the types of damage buildings are seeing, especially in the southeast Queensland area. We hope this information aids both body corporate owners and committees dealing with an emergency. We discuss what to do now, ways committees can navigate the issues they are facing and what you can do in your building to mitigate risks in the future. This includes tips about why now is the perfect time to look at your sinking fund, plus scheduling preventative maintenance. Finally, we speak about insurance and flood cover.

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What sort of damage are you seeing in buildings? What are people experiencing in the southeast Queensland area?

Building flooding and flooding of car park basements and things like that seem to be where the major of the damage has taken place. Then you’re talking about all of the normal damage that occurs when there are storms, roofs and window leaks, a lot of water ingress.

If you’re in a body corporate building and you’ve been affected by the flooding emergency, what can you do as either a lot owner or committee member?

We’ve already got a perfect storm of limited supply of materials and contractors and this emergency only going to exacerbate that situation. You can expect to see prices going up because that’s what happens when this type of situation occurs. You can expect to see long queues because there’s just more work to do than there was two weeks ago. It’s going to take contractors a long time to reach all of the properties that are affected.

What can you do if you’re a committee? What can you do if you’re an owner?

Consider how urgent your works are and be patient within that context. If you have a minor leak, you might just have to accept that you’re slightly behind in the queue compared to a building that’s had its whole basement flooded.

During an emergency, body corporate managers, insurers and contractors all have to triage these works as they come through. The first thing that you can do is be patient. You can also assist by calling around looking for contractors yourself if you’re a committee member. You’ll need to make sure those contractors are fully licenced. If you’re asking your body corporate manager to arrange a contractor for you, you might need to remember that you’re one of perhaps 50 different people who are contacting that manager on the day.

As a committee member, start doing some forward planning. Maybe that won’t resolve this event too much but you can start thinking about what’s going to happen when the next event occurs. They may not all be as bad as this one, but we know there’s going to be rain in the future, we know there are going to be storms.

If your building suffered minor damage, perhaps now’s the time to start thinking about what to do to make sure you don’t suffer damage in the future. Maybe get a roofer out on a more regular basis, or have a building inspection done more frequently, so you can do the work when the sun is shining, essentially, and your body corporate is not stuck waiting until after a major event, waiting for assistance during an emergency.

You body corporate committee can form a plan for the next weather event or emergency

Now is a good time to have conversations about what the building experienced, the way it was handled during the crisis and then look at what you could have done differently or better. Or if you’re building wasn’t affected this time, what you can learn from other buildings and how you can set yourself up so that if an event like this, or something similar, happens again you’ve got some sort of a plan in place.

There are some things that we can’t change. We can’t change the intensity of the weather, we can’t change things like the location of your building. If you’re in a site that’s more prone to flooding, you can’t change that kind of thing. But you can know that you’re more likely to suffer damage and then you can take precautions, undertake preparations.

Now is a very good time to get people thinking about what kind of preventative maintenance they could undertake. Everyone is much more aware of what the possible damage is, and what the possible risks are for their building. Now is the time to start thinking about how resistant your building is to this type of incident or a similar emergency.

The weather is getting more intense. A lot of our buildings aren’t designed for that type of weather. They are not built to withstand the intensity of the storms we’re starting to see on a much more frequent basis. That means the buildings are going to have to change because the storms themselves are not going to change and we may be seeing storm events like this more frequently. Buildings are going to have to become more resilient and owners are going to have to look at the ways that can happen.

How weather events and natural disasters are affecting insurance for bodies corporate

This is gonna be a massive insurance event. Many claims are currently happening and there will be even more over the next couple of weeks. Not every issue becomes immediately apparent on day one.

Any claim is going to have a significant effect on body corporate insurance moving forward. We’re already in a marketplace where insurance has been rising year on year for a number of years now. The costs of premiums are really pushing a lot of body corporate plan’s budgets out to an uncomfortable level. Unfortunately, that’s going to increase. That’s not going to go away.

You can expect premiums to rise quite a bit over the next few years, partly as a result of this storm. You can also expect body corporate insurers to tighten the terms that they’ll offer, especially if they think these storms are going to come more frequently. Of course, frequent storms will cost them a lot of money, so they’re much more likely to restrict the terms of coverage for body corporate insurance. Flood coverage is probably the obvious one. Currently, it’s mostly an option for most sites, but you’ve already got large areas where insurers won’t offer flood coverage. We can expect these areas to be expanded, with insurance companies stating they can no longer cover flood for more buildings. That’s going to have a major impact.

What about those buildings without flood cover

Tyrone Shandiman from Strata Insurance Solution recently published an article: Not covered for Flood? Here are some things you need to know. This article provides some options that may be available to you if your building doesn’t have flood cover.

I’m dealing with one building in Brisbane that’s an interesting case. It doesn’t have coverage, but they are going to argue that their damage was done by rainwater coming down, rather than water coming up. This is difficult to prove but, in this case, the building’s quite fortunate in that they were very organised as a committee. They took a lot of videos and pictures showing the damage started from the rain coming down. Hopefully, their claim can progress. Not everyone will have done that.

This is an example of where your committee can talk about a plan, be ready to mobilise straight away. It’s beneficial to start collecting evidence immediately and collate and organise your response quickly. It’s not easy to do without some forethought and a plan.

Anyone can take video?

You don’t have to be on the committee to assist. If you’re a lot owner in a building, you can take videos and provide evidence to the committee. This evidence not only helps with the insurance claims, but it also helps contractors because they can see what’s happening and where the water’s coming from.

Information is power. The more information you can provide, the easier it is to present. Insurers send this to the contractors, and the faster your buildings can be repaired. The less information, the longer it takes.

Preventative maintenance and getting ready for the next emergency

Have the conversation about what you may be able to do better. What else can you do at this point to mitigate any risks?

Money matters and cash is king

Buildings that have managed well through this crisis have tended to be buildings with cash in the bank. If you’ve got money in the bank, even if it wasn’t saved for the purpose of rectifying storm damage, at least you’re able to act and move very quickly.

If you don’t have a sinking fund built up, if you don’t have cash in the bank, you’re in real trouble. The committee and the body corporate manager not only have to try to arrange repairs, but they have to juggle the finances of those repairs. You might be able to get money by organising a special Levy or perhaps a strata loan. But those aren’t really very happy scenarios for most people and it’s hard to think about this when you’ve got damage to the building.

Buildings without cash need to think about whether they’re able to handle an emergency or not. If not, you have to look at starting to raise extra funds and having that safety buffer available. Money matters and cash is king.

The other thing is preventative maintenance. Make sure you have a proper preventative maintenance schedule in place. Have someone come out to your building every year to check for possible risks. Send your body corporate manager an email to ask when the last time your pumps were serviced, etc. Then keep up with that preventive maintenance schedule.

It might be frustrating for the next months. It may take a long time to resolve claims and for contractors to get to some of the buildings but there’s no lack of determination on the part of the people in the industry to try to make these things happen for you.

William Marquand Tower Body Corporate E: willmarquand@towerbodycorporate.com.au P: 07 5609 4924

This post appears in Strata News #551.

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