This article discusses whether a previous owner cancelling strata insurance after settlement is allowed, and explains how insurance cover and refunds should be handled after a sale.
Question: I’ve recently purchased a unit. After settlement, the vendor has contacted the owners corporation insurer requesting a refund of their insurance policy payment. Does this cancel my insurance?
I bought a unit in a 4 lot strata this year. There does not appear to be any operative owners corporation. The vendor has contacted the insurance company seeking a refund of the owners corporation insurance premium. This policy was taken out prior to the sale of the unit. The full policy was paid for by the previous owner of my unit as she had no contact with the other 3 owners. Once the refund has been paid, the building will be uninsured. What are my options?
Answer: If the property has already settled, the previous owner does not have the right to approach the insurer seeking a refund of premiums and you should make contact with the insurer to ensure this does not occur.
No insurer will provide a partial refund for an insurance premium associated with one lot in a property.
The insurer generally will only provide a refund in the event the policy is cancelled in full and this cancellation is authorised by the owners corporation.
If the property has already settled, the previous owner does not have the right to approach the insurer seeking a refund of premiums and you should make contact with the insurer to ensure this does not occur.
The correct way to apportion insurance costs is through the settlement process and the previous owners conveyancer should factor this into the settlement of Owners Corporation money.
This post appears in the November 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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