QLD: Unauthorised renovations caused a leak — who pays the excess and will insurance investigate?

Question: A lot owner carrying out unauthorised renovations experienced a leak. Is the owner responsible for the excess? Will insurance investigate the cause of the leak?

Our body corporate has six duplexes / 12 units at ground level. Without approval, one lot owner appears to be renovating the interior of their unit.

The kitchen sink and hot water system have been removed. A leak in an internal wall flooded parts of the unit. The leak may have been due to the renovations.

Is the lot owner responsible for the $5000 excess? Will the insurance company carry out a thorough investigation into the cause of the leak?

Answer: Several factors will determine how the insurer assesses the claim.

Concerning who is responsible for the excess, Queensland legislation states that for claims affecting one lot only, the excess is usually paid for by the lot owner unless the body corporate decides it is unreasonable in all the circumstances for the owner to pay the excess.

Concerning the investigation process, several factors will determine how the insurer assesses the claim. The assessment options are:

1. Assessor: The insurer may appoint an assessor. However, it is important to note that appointing an assessor is an additional cost to the insurer. Assessors are therefore appointed on a case by case basis. If the insurer does not appoint an assessor, they will review the information and documents provided to them as part of their investigation.
2. Insurer Appointed Builder: In the absence of appointing an assessor, the insurer can also appoint their own builder to report on the damage and quote to repair.
3. Desktop Assessment: If the owner submits all of the documentation and information needed (such as reports from builders, photos, quotes etc.), the insurer may also conduct a desktop assessment of the information provided.

If the committee has specific concerns about the claim, they can discuss these concerns with the insurer when they lodge the claim. While the insurer has the right to decide on how they assess the claim, the committee can also ask the insurer to appoint an assessor to investigate any concerns.

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.