QLD: Why do we have to pay 50% insurance excess for a storm damaged fence repair?

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:

1. the contract between the body corporate and the lot owners?
2. the community management statement (CMS)?
3. 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.