Question: There is a leak between a top and bottom unit. The OC says it is an owner issue but the insurance company sites the problem is a building issue. Who is responsible?
In our 25 unit complex, there is water leaking between the open terrace of one lot and the inside unit of the lot beneath. The strata plan shows lot boundaries as ‘median’.
The OC says this is a lot issue between the two lots concerning private property and as it is not common property, it is not their responsibility.
Neither lot owner’s insurance will cover the damage. They site that the problem is a building issue and comes under the owners corporation’s strata insurance.
How do we resolve this?
Answer: based on the limited information, the water damage that has resulted from the leak may be considered, but fixing the leak may not.
The strata insurance policy is the most appropriate policy to respond to this claim as a lot owners “contents” policy does not cover the building.
Whilst the “building” is covered by the policy, we need to understand whether the “event” itself is covered or excluded.
We expect that some (or all) of the claim may not be covered. Water damage claims are our most contested claims with insurers because there is often a component of maintenance and also repair of water damage. Strata insurance is designed to cover the cost to repair water damage to insured property but generally excludes repair costs related to finding and fixing the leak, as it is generally considered the owner’s responsibility to maintain their property and such repairs relate to general maintenance or wear and tear. The insurer has exclusions such as lack of maintenance, rust, oxidation, wear and tear, corrosion, gradual deterioration, developing flaws, building defects, the rectification of faulty workmanship etc.
So based on the limited information, the water damage that has resulted from the leak may be considered but fixing the leak may not. If the cost of the water damage component of the claim exceeds the excess, a claim can be lodged.
For anything not covered by the insurance claim, the owner of the property is responsible for the maintenance and upkeep of the property unless they can demonstrate another party is liable for the damage (for example the bottom unit may be able to demonstrate the top unit is liable).
This post appears in the February 2023 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.