Question: Is it possible to insure a Retaining wall? I have tried to insure the retaining wall with my home and contents insurance but the insurance company will not commit.
Is it possible to insure a Retaining wall? We have just spent $180,000 replacing a retaining wall on our complex of 10 strata units, amounting to $18,000 from each unit. Now we have an issue with a retaining wall on the opposite side and the chairperson is saying “it is on your land you pay for it”. I cannot work out why one side is different to the other. All walled areas in our scheme are on common property with exclusive rights.
I have tried to insure the retaining wall with my home and contents insurance but the insurance company will not commit. Retaining walls seem to be a very grey area and no one wants to commit.
Answer: You cannot insure items defined as “building” under a policy other than the strata policy, due to the basic principal that you can’t insure part of a building.
I think it is important to understand the difference between “responsibility to insure” and “responsibility to maintain” the retaining wall. It is my view this is where the misunderstanding may be.
As the retaining wall is a permanent fixture, a strata policy defines the retaining wall as “building” under the strata insurance policy. As you cannot insure items defined as “building” under a policy other than the strata policy, due to the basic principal that you can’t insure part of a building, The Body Corporate Management Act requires the body corporate to insure permanent fixtures including those inside a lot under the strata insurance policy. It is an accepted practice in strata that the body corporate has responsibility to insure permanent fixtures.
For events that fall outside of an insurance claim, a lot owner has responsibility to maintain property that forms part of their lot. In the case of a retaining wall, strata policies will cover sudden and accidental damage that can be the first barrier to making a claim. Furthermore, exclusions can apply including storm or rainwater to retaining walls, gradual deterioration, gradually operating causes, earth movement, erosion, invasion of tree or plant roots, normal settling, creeping, heaving, seepage, shrinkage, or expansion in buildings, foundations, footings and other structural improvements.
Outside of maintenance matters that are not covered by insurance, it falls to the owner of the property to maintain that property. With regard to whether the retaining wall forms part of common property and is the body corporate responsibility to maintain or whether the retaining wall forms part of the lot and is the lot owners responsibility to maintain, that question fits the professional remit of a strata manager. Notwithstanding, strata plans should provide clarity on this question.
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 Advisernet Australia AFSL No 240549, ABN 15 003 886 687.