NSW: Can Strata Insurance Cover Legal Costs in Disputes With a Dysfunctional Committee?

This article discusses strata insurance legal costs, explaining whether legal fees from disputes with a dysfunctional committee can be claimed and how such claims may affect insurance premiums.

Question: We’re engaging a solicitor to deal with our dysfunctional committee. Can we claim the legal costs from our strata insurance? How will that impact our insurance premium?

Answer: The owners corporation or committee might be eligible to claim under the strata insurance policy for legal costs incurred in defending against legal actions.

When engaging a solicitor to address issues with a dysfunctional committee, it’s important to understand how this action interacts with strata insurance policies, particularly regarding the coverage of legal costs and the potential impact on insurance premiums.

• Legal costs for lot owners: Generally, the legal expenses incurred by a lot owner in pursuing action against the owners corporation or its committee are not covered under a standard strata insurance policy. As a lot owner, you would typically be responsible for bearing the cost of legal representation and any related expenses.
• Coverage for the owners corporation or committee: Conversely, the body corporate or committee might be eligible to claim under the strata insurance policy for legal costs incurred in defending against legal actions. Such coverage is contingent upon the specifics of the insurance policy, which may include legal defence costs as part of its protection for the owners corporation’s officers and the committee.

This post appears in the April 2024 edition of The NSW Strata Magazine.

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.