Question: An owner caused major damage to their garage. The body corporate insurer paid for repairs, and the owner paid the excess. The claim resulted in a substantial insurance increase at renewal time. Insurance did not recover the costs from the driver because the driver was an owner in the building. Is this correct?
An owner within our complex of 36 townhouses misjudged their garage door opening and caused significant structural damage to the cost of around $30,000. The body corporate insurer paid for repairs, and the owner paid the excess.
When the policy fell due for renewal, the premium had increased significantly, and insurance advised the body corporate that the increase was partly due to the claim. We asked the insurer they didn’t recover costs from the owner’s vehicle insurance. They responded that this would not be possible since the owner caused the damage and was effectively a policyholder for the body corporate insurance policy. Had any other third party caused the damage, they would have pursued the driver’s insurance for cost recovery. Can you please advise if this is correct?
The insurance is held by the body corporate. Is this not a separate legal entity from the owner and their vehicle insurer? Could the body corporate insurer recover the repair costs from the owner’s vehicle insurance?
Answer: As the lot owner contributes towards the premium, they are an insured party under the policy.
Yes. If a non-insured third party impacted the strata property, the insurer would have pursued a recovery action against the at fault party to recover the costs.
In this instance, we believe the insurer was correct in advising that they will not pursue a recovery against a lot owner or their vehicle insurance.
As the lot owner contributes towards the premium, they are an insured party under the policy.
Although the strata insurance is in the name of the body corporate, strata policies include specific definitions of “you” that include lot owners and the interest of members of the body corporate.
Insurers are not allowed to lawfully pursue a recovery against someone they insure for a claim they have already paid.
In that essence, it would be the same if you owned a freestanding home, you impacted your garage door, and your home insurer pursued recovery against you for the damage.
While we understand the concern over additional costs associated with a claim, it’s important to consider the implications when buying a property in a strata development. When you choose to own in a strata, you become part of the collective claims history for the complex, which includes claims that may have no direct connection to you. This is a risk that must be considered when deciding to own a property in a strata development.
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.