These responses to lot owner’s questions about who pays the excess on a Body Corporate insurance claim have been supplied by Tyrone Shandiman, Strata Insurance Solutions.
Question: After my hot water system was repaired by a plumber, a connection blew and both my unit and the unit downstairs suffered water damage. Am I liable for the Body Corporate insurance excess?
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My hot-water system was replaced by the building’s preferred plumber. After he completed the works and left, a connection blew and water flooded my unit. There was damage to carpets, furniture, curtains etc that is being covered by my contents insurance. There is also some damage to built-in shelving and bubbling/flaking of wall paint. Water also caused some damage to the unit below mine. I don’t know what the value of this damage is.
The BC Manager has advised that if I submit a claim to the Body Corporate’s insurer, I will be required to pay the Body Corporate insurance excess of $2,500, as the cause of the damage to other property originated in my lot. I will be advised in due course whether the claim has been processed once the claim form is submitted and whether the Body Corporate insurance excess is in fact payable.
It seems to me the damage was caused by the plumber’s actions, either due to negligence, accidental or other.
Will I have to pay the Body Corporate insurance excess by just submitting the claim form, regardless of whether the insurer processes the claim or not?
Is it likely I will I have to pay this large excess even though it is not my fault? I don’t know if there is even $2500 damage to my shelving and walls.
Am I liable for the damage to the unit below?
Would the BC insurer likely claim all of the damage to both lots off the plumber, and me not pay the Body Corporate insurance excess?
In other words, I don’t know if it is financially worth my while to submit a claim with BC insurer given the large excess.
Answer: It will be a matter for the body corporate to decide on the payment of the Body Corporate insurance excess.
Section 184 of the Body Corporate and Community Management (Standard Module) Regulation 2008 provides a specific reference to who is responsible for the excess. (see below)
As the claim has caused damage to 2 lots, the owner of a lot is only liable to pay the excess if the body corporate decides it is reasonable in all the circumstances for the Body Corporate insurance excess to be paid for by the lot owner. If the owner has not already done so, they may wish to put a case forward to the body corporate outlining why they believe in the circumstances it is not reasonable for them to pay the excess, (for example the claim was from an unforeseen event following an upgrade of a water system). Ultimately, however, it will be a matter for the body corporate to decide on the payment of the Body Corporate insurance excess.
Excess payments are usually made in the following ways:
- The payment is either deducted from any settlement the insurer pays; or
- If the insurer engages a builder/contractor, the excess is payable to the builder/contractor before works start.
If repairs are below excess, the insurer will close the claim without proceeding and the owner can request to see a copy of the quotes before the excess is paid.
If the insurer believes the contractor who installed the water system is liable for the damage, they will pursue a recovery action against the contractor and usually the insurer will refund the excess if they are successful in their recovery – we recommend checking this with the insurer or strata manager as policies will differ from insurer to insurer with regard to Body Corporate insurance excess.
This post appears in Strata News #271.
Question: I’ve had a pipe leak in the bathroom leaving extensive damage that was covered by Body Corporate insurance. Who pays the water damage excess?
Recently I’ve had a pipe leak in the bathroom leaving extensive damage that was covered by body Corporate insurance. However, the $500 excess had an extra $200 water damage excess.
Is the water damage excess covered by the body corporate or the individual lot owner? The water leak was not a hot water pipe.
Answer: If the pipe and damage is within 1 lot, the excess would usually be paid for by the lot owner.
In Queensland, Section 184 of the Body Corporate and Community Management (Standard Module) Regulation 2008 provides a specific reference to who is responsible for the excess.
- For an event affecting only 1 lot, the owner of the lot is liable to pay the excess unless the body corporate decides it is unreasonable in all the circumstances for the owner to bear the liability. Example — If a shower screen is damaged in a lot and an insurance claim is made under the body corporate’s reinstatement insurance, the owner of the lot would be liable under subsection (3) to pay the excess unless the body corporate decides it is unreasonable for the owner to be required to pay it. However, if there is a fire within a lot caused by a short circuit in electrical wiring located in an internal partition, the body corporate might decide it would be unreasonable for the owner to be required to pay the excess.
- For an event affecting 2 or more lots, or 1 or more lots and common property, the body corporate is liable to pay the excess unless the body corporate decides it is reasonable in all the circumstances for the excess to be paid for by the owner of a particular lot or to be shared between owners of particular lots, or between the owner of a lot and the body corporate, or between owners of particular lots and the body corporate.
If the pipe and damage is within 1 lot, the excess would usually be paid for by the lot owner.
This post appears in Strata News #249.
Read Next:
- QLD: Alternative Insurance
- QLD: Q&A Is a plumbed in dishwasher covered under strata title insurance?
- Water Damage Insurance Claims and The Excess in Strata Properties
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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