This article discusses hot water meter insurance excess in a strata scheme, explaining who may be responsible for paying the excess when a meter failure causes water damage.
Question: A hot water meter from an embedded gas hot water system failed, leaked water onto the corridor carpet and damaged the floating wood floor inside an apartment. Who is liable for the excess?
Our 4 level apartment building has an embedded gas hot water system. One of the hot water meters in the ceiling in the corridor outside an apartment failed, leaked water onto the corridor carpet and damaged the floating wood floor inside an apartment. The meter was specific to the damaged apartment. Is the apartment owner liable for the large insurance excess on the OC claim? As the meter is the property of the utility company was the liability theirs in this situation?
Answer: In cases where an owner’s lot causes damage to another lot, they may be liable for the access because of the benefit principle that applies.
With regard to excess in Victoria the legislation is silent. I wish every state adopted Queensland’s legislation because it actually talks about excess, whereas every other state in Australia does not talk about excess. So we then have to go to what a judge is saying in these cases.
So in this instance, how Victoria works is they work on the benefit principle. I’m going to read to you a judgement by Paisley vs The Owners Corporation for PS 55240. This does give good guidance on access and in particular the benefit principle.
In my view, the payment of an excess, as opposed to the payment of insurance premium, attracts the benefit principle. It is money paid out to effect to repair and as such consideration should be given to the person or persons who benefit. In this instance, the owner of the lot benefits because it covers repair to their property.
Now, if the owner of lot 4 is responsible for the leak, the judge then goes on to say the question then arises, who benefits from the payment made from insurance? In most scenarios, the excess is paid by the person whose properties or actions resulted in the damage. That is because the person receiving the benefit by not having to pay out the full cost of damage. So in the case where someone is responsible for the water damage, what the judge has said is that it is Mr. PAISLEY, who was the respondent, is receiving the benefit not because Mr. Paisley’s unit was damaged and requires repair but because the source or cause of damage arose from within Mr. Paisley’s lot. In effect, he is receiving the benefit of not having to pay the cost of the full damage. So in cases where an owner’s lot causes damage to another lot, they may be liable for the access because of the benefit principle that applies.
This post appears in the May 2022 edition of The VIC 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.
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