Question: Who is liable if a fire sprinkler is faulty and it is activated in an apartment causing water damage to a lot owner’s property?
Answer: Ultimately, the party liable for the damage caused to the lot is the party that is responsible for the maintenance of the faulty sprinkler.
Todd Garsden, Mahoneys:
Ultimately, the party liable for the damage caused to the lot is the party that is responsible for the maintenance of the faulty sprinkler. If any related party has an insurance policy to reduce that liability, then that is a benefit. All utility infrastructure that forms part of scheme land is, by default, common property (and the maintenance obligation of the body corporate) unless it solely relates to supplying services to the lot and is within the boundaries of the lot.
Adjudicators have held that fire related infrastructure which only relates to one lot can actually service the entire scheme if it links back to a building wide notification system – making the body corporate responsible for its maintenance.
Accordingly, it is important to ascertain what part of the sprinkler system was faulty. Is it:
- a part that only services the lot (in which case the lot owner would be responsible); or
- a part that connects back to a building wide system (in which case the body corporate would be responsible).
Tyrone Shandiman, Strata Insurance Solutions:
In this instance, it is recommended an insurance claim is made on both the strata policy and the lot owner’s contents or landlords insurance.
From a strata insurance perspective, insurers cover the cost to repair water damage to insured property but generally exclude repairs costs related to finding and fixing the leak, as it is generally considered a maintenance responsibility failure by the owner or body corporate and such repairs relate to general maintenance, defects or wear and tear.
As the strata insurance policy does not cover damage to contents items including carpets, curtains/blinds, appliances and other contents items, we recommend a claim is made on the lot owners’ landlords or contents insurance.
If the insurer believes the body corporate is responsible for the damage, they can take recovery action against the body corporate and in such instances, the contents insurer may repay the excess subject to the policy terms and conditions.
In such instances where a claim is made against the body corporate for legal liability for damage to lot owner’s contents a claim can be made on the Legal Liability or Public Liability section of the strata policy.
Todd Garsden Mahoneys E: tgarsden@mahoneys.com.au P: 07 3007 3753
Tyrone Shandiman Strata Insurance Solutions E: tshandiman@iaa.net.au P: 07 3899 5129
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.