Question: Water ingress to a lower unit in our complex has occurred. The owner of the unit that has suffered water ingression wants to make a claim on the body corporate for loss of rent. Is our body corporate liable?
Water ingress to a lower unit in our complex has occurred.
It has been inspected by an engineer and a full report submitted. The bottom line is that the patio tiles on the two units above need to be removed and re-tiled after the new waterproofing seal is installed.
In addition, flashing on the roof has been identified also as a possible cause. The body corporate has made arrangements for repairs to be carried out by qualified contractors.
In the meantime, the owner of the unit that has suffered water ingression wants to make a claim on the body corporate for loss of rent.
It is unknown whether or not he has Landlord and Tenant insurance on the property in question.
Is our body corporate liable for the loss of rental income for the involved unit.
Answer: Owners will have loss of rent cover that can be considered on two policies – Landlords Content Insurance & Strata Insurance.
Owners will have loss of rent cover that can be considered on two policies – Landlords Content Insurance & Strata Insurance.
Loss of rent cover under Landlords Contents Insurance is only considered when the contents insured by the policy is damaged and this causes the property to be uninhabitable. For example, carpet damage is generally considered to be contents (not covered by strata) so the Landlords contents insurance is the policy that should cover loss of rent associated with damage to the carpet.
Loss of rent under a strata building applies when property insured by the policy (i.e. Building) is damaged by a claimable event and the property is uninhabitable. In the case of water damage stated below, if the damage is to ceilings and walls, the strata insurance policy is the policy that should be considered for loss of rent claims.
In the event of a claim that involves contents & building, insurers generally share rental costs which is an agreement by insurers after assessing the facts.
The body corporate has a responsibility to arrange an insurance policy and most policies will cover loss of rent – we recommend a claim is referred to the strata insurer and provided the loss of rent event is claimable the strata insurer will be liable for the costs (not the body corporate).
If the loss of rent is not covered, the body corporate is generally liable in the event of negligence, in which case, further consideration should be placed on referring a claim to the public liability section of the strata insurance policy.
Tyrone Shandiman
Strata Insurance Solutions
T: 07 3899 5129
E: tshandiman@iaa.net.au
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. This information is designed as a basic guide with relation to cover and you should refer to your Policy Schedule and Product Disclosure Statement for all terms and conditions related to cover under any insurance policy. 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.
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