WA: Q&A Who pays Insurance Excess? Lot Owner or Strata Company?

The LookUpStrata Team

5 years ago

These questions are about payment of the insurance excess in WA.

Table of Contents:

QUESTION: I accidentally damaged the cooktop in my unit. Does strata insurance cover this? If so, why are they refusing to allow me to make a claim?

QUESTION: Due to a lack of maintenance at our building, the property is not secure, and my car was broken into. Is strata responsible, and can I claim the damage and loss on strata insurance?

QUESTION: In our strata complex, a lot owner’s visitor caused damage to common property by reversing their car into the gate. The cost to repair the damage is less than the insurance excess. As it was their visitor, is the lot owner responsible for the damage?

QUESTION: After several plumbing failures that have lead to an increase in insurance premiums, what is the best way to minimise future events?

QUESTION: A resident has caused damage resulting in an insurance claim. Can the Strata Company charge that resident for the excess?

QUESTION: I had to have timber floors repaired in my unit due to water damage. I was wondering whether the excess was my responsibility given the damage was a strata insurance claim?

QUESTION: Who is responsible for strata insurance excess in WA?

QUESTION: Our unit’s back fence borders onto common property and was blown down in a recent WA storm. Strata is demanding we pay 50% of the costs to replace the fence. Isn’t this covered by strata insurance?

QUESTION: If a unit owner in WA makes a claim against the Strata Company’s insurance for a fusion claim, is the Strata company entitled to insist the unit owner pays the insurance excess?

QUESTION: A neighboured damaged the strata boundary fence. Insurance will cover the cost of repair, but who pays the excess?

QUESTION: After Cyclone Veronica, units in our complex now have mould. Is mould covered by insurance or would this be a lot owner problem?

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Question: I accidentally damaged the cooktop in my unit. Does strata insurance cover this? If so, why are they refusing to allow me to make a claim?

I’m an owner occupier in a strata apartment in WA. I accidentally broke my cooktop. When I contacted my contents insurance holder, they mentioned I may be able to claim the repair on the strata insurance. When I contacted my strata manager, they said strata insurance didn’t cover this, then backtracked to say the cooktop was common property. They also informed me it would cost $ 5,000 in excess to make a claim, and as it was accidental damage, the cooktop was my responsibility to repair. They’ve threatened me with a breach if I make a claim. When I asked for a breakdown of what else inside my lot would be considered common property, the strata manager said they were not an insurance agent and would provide any further information. What happens with internal fixtures like the cooktop when strata won’t help me and the contents insurance won’t either?

Answer: The strata corporation is not obligated to cover costs for insurable damage below the excess of lot owner property.

It is important to first address a common misunderstanding regarding two crucial considerations within strata:

Common Property Ownership: This refers to property that falls under the ownership and responsibility of the strata corporation.

Insured Property: Strata insurance does not just cover common property. The strata corporation is responsible for insuring certain items within the strata building, including lot owners’ property.

In terms of what the strata corporation must insure, the basic principle is that if you pick the unit up and shake it, anything that falls out is lot owners’ contents plus temporary flooring such as carpet, blinds and curtains, and appliances that are not permanently attached. These items need to be insured by contents/landlords insurance. Other permanent fixtures, including but not limited to kitchen and bathroom cabinetry, are covered by strata insurance subject to the policy terms, conditions and exclusions.

Although the lot owner is responsible for maintaining the cooktop, it is not categorised as common property. It’s considered a permanent fixture. Consequently, the strata corporation is obligated to include it in the strata insurance policy. If the cooktop is permanently affixed to the kitchen cabinets, it’s considered a part of the building and thus covered by the strata insurance, subject to the policy excess.

In the case where the cost of repairs is below the policy excess, the responsibility for repair lies with the party accountable for property maintenance, which, in this case, is the lot owner. The strata corporation is not obligated to cover costs for insurable damage below the excess that pertains to lot owner property.

We cannot comment on the by-laws mentioned where the owner’s corporation has threatened to breach the owner if they lodge a claim for accidental damage.

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.

This post appears in Strata News #662.

Question: Due to a lack of maintenance at our building, the property is not secure, and my car was broken into. Is strata responsible, and can I claim the damage and loss on strata insurance?

I’m renting an apartment in a strata block. I park my car in my designated parking bay. It was broken into three times.

Two gates on the property are continuously broken, and the property is not secure. What are the strata council’s responsibilities here? Does strata insurance cover this?

Answer: The short answer is “no”.

Section 91(1)(c) states that the strata company must repair and maintain common property. This would include the gates at the scheme. If you feel this is not being done, and it is to the detriment of the scheme, we suggest raising the concern with the strata manager and/or council of owners.

However, in reference to your question – is the damage to your car claimable under the strata insurance if the gates are not working? The short answer is “no”.

Strata insurance will only cover the building and any strata owned contents against malicious damage. Your car is privately owned and does not fall into either of these categories. The strata insurance does not cover it.

Rick Blampey SVN Perth E: rblampey@svn.com.au P: 08 9427 7955

This post appears in Strata News #653.

Question: In our strata complex, a lot owner’s visitor caused damage to common property by reversing their car into the gate. The cost to repair the damage is less than the insurance excess. As it was their visitor, is the lot owner responsible for the damage?

Answer: Initiate a recovery action against the driver.

In instances where an at fault party (driver) has caused damage to property below the insurance excess, we recommend the strata corporation initiate a recovery action against the driver.

The best way to do this is firstly via a letter of demand which outlines:

Opening statement that you are making a demand (i.e. We would like to submit a letter of demand in relation to a recent incident. If you have insurance the we recommend this letter is sent to your insurer to lodge a claim under the public liability section of your insurance policy.)

Circumstances of the event (include date & description of damage);

Why you believe the driver is responsible;

Summary of costs and a request for reimbursement (include invoices or quotes for repairs with your demand);

Bank details for reimbursement.

Should you not receive a favourable response to the demand letter, you may then apply to the applicable small claims tribunal in your state and they can order the driver to make payment.

Tyrone Shandiman Strata Insurance Solutions E: tshandiman@iaa.net.au P: 07 3899 5129

This post appears in the April 2022 edition of The WA Strata Magazine.

Question: After several plumbing failures that have to lead to an increase in insurance premiums, what is the best way to minimise future events?

We’ve had several plumbing failures leading to damage to various apartments. This has led to increased premiums and deductibles and our Broker is now only able to source one insurer.

We have sought to minimise future events by seeking to get all apartments to adopt a standard device and turn the water off to their apartment when away for 3 days or more.

We are looking to update the Strata Rules.

Is there any standard wording that we can use?

Should we include an annual / Bi-annual for access to inspect?

Can we require the Owner, should they fail to comply so that the Strata’s insurer may seek redress from the owner?

All recommendations would be appreciated.

Answer: The best way from an insurance perspective to encourage owners to conduct preventative maintenance is for the insurer to impose specific excesses.

Part of this question is a strata management question. Around the writing of bylaws, obviously, that’s outside of the scope of an insurance broker. I will just say that you have to be careful as a Strata Corporation that you’re not imposing certain requirements on how an owner maintains their lot. That is the owners right and responsibility to do so. I’ve seen in the past owners corporations and strata corporations that have tried to impose such requirements and they’ve been challenged in the relevant commissioner’s office. So be careful with that component of how you write the bylaw and seek legal advice.

The best way from an insurance perspective to encourage owners to conduct preventative maintenance is for the insurer to impose specific excesses. If there’s a $5000 or $10,000, water damage excess for the pipes, and as a strata Corporation you encouraged owners to install shut off devices and water sensing devices, an owner that is looking to not pay that excess would obviously seek to install and follow those recommendations of the strata company.

When it comes to the question of ‘Can the insurer pursue an owner for a recovery of a claim in their lot because they didn’t install the sensors?’, the short answer is no. They can’t and you need to remember that an owner is an insured party under a policy. Just as the insurer couldn’t pursue you because you failed to maintain your pipe in your house, and they pay the claim out, the insurer also cannot pursue recovery from an owner that is an insured party under the policy. They can for tenants, and they can for non-insured parties, but they simply can’t do it for owners for the very reason that they have an insurable interest.

Tyrone Shandiman Strata Insurance Solutions E: tshandiman@iaa.net.au P: 07 3899 5129

This post appears in Strata News #516.

Question: A resident has caused damage resulting in an insurance claim. Can the Strata Company charge that resident for the excess?

I live in a multi-story apartment building in Perth WA.

We have had several claims recently where a resident or resident’s guests have caused damage, normally within their unit, resulting in an insurance claim.

Is there any way the Strata Company can charge the excess to the resident involved?

Does this require an amendment to our Management Statement?

Answer: It may be reasonable to suggest the lot owner is liable for the excess – particularly in cases of negligence.

The Strata Titles Act 1985 (WA) is silent on who is responsible for payment of excess. We understand Queensland legislation is the only legislation that specifically provides guidance around excess.

As legislation is silent on this issue, we firstly recommend reviewing the by-laws of the strata corporation to see if there is guidance on excess in the strata company by-laws.

Failing this, we generally advise clients that for claims affecting one lot only it is usually paid for by the lot owner unless the strata company decides it is fair in the circumstances for strata to bear the cost and for claims affecting two or more lots or one lot and common property it is usually paid for by the strata company unless the strata company decides it is fair for one lot owner (or a number of lot owners) to bear the cost.

As the water damage has come from a leak caused by a specific lot owner or their invited guest, it may be reasonable to suggest the lot owner is liable for the excess – particularly in cases of negligence.

I am aware of cases in other states whereby the applicable legislative body has found the payment of an insurance excess attracts the benefit principle. It is money paid out to effect a repair, and as such consideration should be given to the person or persons who benefit. In this case you may suggest the lot owner is receiving the benefit. Not because their property was damaged and requires repair, but because the source or cause of the damage arose from their lot. In effect, the lot owner is receiving the benefit of not having to pay the full cost of the damage.

Tyrone Shandiman Strata Insurance Solutions E: tshandiman@iaa.net.au P: 07 3899 5129

This post appears in the May 2021 edition of The WA Strata Magazine.

Question: I had to have timber floors repaired in my unit due to water damage. I was wondering whether the excess was my responsibility given the damage was a strata insurance claim?

I had to have timber floors repaired in my unit due to water damage caused by water seepage under the door from the common property walkway.

Strata claimed insurance for the repair work, however, I was asked to pay the excess.

I was wondering whether the excess was my responsibility given the damage was a strata insurance claim?

Answer: As legislation is silent on this issue, we firstly recommend reviewing the by-laws of the strata company to see if there is guidance on excess in the strata corporation by-laws.

The Strata Titles Act 1985 (WA) is silent on who is responsible for payment of excess. We understand Queensland legislation is the only legislation that specifically provides guidance around excess.

As legislation is silent on this issue, we firstly recommend reviewing the by-laws of the strata company to see if there is guidance on excess in the strata corporation by-laws.

Failing this, we generally advise clients that for claims effecting one lot only it is usually paid for by the lot owner unless the strata corporation decides it is fair in the circumstances for the body corporate to bear the cost and for claims effecting two or more lots or one lot and common property it is usually paid for by the strata corporation unless the strata corporation decides it is fair for one lot owner (or a number of lot owners) to bear the cost.

As the water damage has come from a leak on common property it may be reasonable to expect the strata corporation to pay the excess – particularly in cases of negligence.

I am aware of cases in other states whereby the applicable legislative body has found the payment of an insurance excess attracts the benefit principle. It is money paid out to effect a repair, and as such consideration should be given to the person or persons who benefit. In this case you may suggest the strata corporation are receiving the benefit. Not because common property was damaged and requires repair, but because the source or cause of the damage arose from common property. In effect, the strata corporation is receiving the benefit of not having to pay the full cost of the damage.

Tyrone Shandiman Strata Insurance Solutions E: tshandiman@iaa.net.au P: 07 3899 5129

This post appears in the May 2021 edition of The WA Strata Magazine.

Question: Who is responsible for strata insurance excess in WA?

I had an accidental fire in my unit. In all previous insurance claims from lot owners, the property excess was always paid by the Strata. We have no recovery cost by- law. Who is responsible for strata insurance excess in WA?

Answer: The Strata Titles Act 1985 WA (STA) appears silent on insurance excesses.

The Strata Titles Act 1985 WA (STA) appears silent on insurance excesses. The strata is responsible to insure the Insurable Assets, as per the STA under s97 Required insurance. Insurable Assets includes the parts of scheme buildings that comprise of lots. If no other agreement or by-law is in place on who is responsible to pay the excess inside a Lot, then the usual practice is the excess is paid by the strata.

Leonie Milonas PSC Property Lync Insurance Brokers E: leonie@lyncinsure.com.au P: 1300 127 503

General Disclosure; The above response is for informational purposes only, and is not insurance, financial or legal advice and should not be relied on as insurance, financial or legal advice. You should consult with a qualified insurance or legal advisor. PSC Property Lync Insurance Brokers is an Authorised Representative (AR 1235681) of Professional Services Corporation Pty Ltd (AFSL 305491).

This post appears in Strata News #462.

Question: Our unit’s back fence borders onto common property and was blown down in a recent WA storm. Strata is demanding we pay 50% of the costs to replace the fence. Isn’t this covered by strata insurance?

We live in a strata titled unit and had a fence blow down in a recent WA storm. This fence is between the unit and strata common property. The common property area is a park used by all everyone the complex, however, Strata management is demanding that we pay 50% of the cost of the repair and our own insurance should cover this.

We are under the understanding that fences are listed under buildings in domestic Strata title policies and should be fully covered for this damage.

What are the legalities of this as we are also of the understanding that if the Strata Committee has a policy in place, we are unable to take out our own insurance in this complex as it will be insured twice!

Answer: Your strata internal boundary fence damage, such as storm damage, is normally covered under a typical residential strata insurance policy.

I assume your Lot is within a strata scheme.

Your strata internal boundary fence damage, such as storm damage, is normally covered under a typical residential strata insurance policy.

Fences that are internally dividing within the strata scheme, between Lot Owner to Lot Owner or Lot Owner and Common Property are generally covered by strata insurance 100% less any applicable excess.

If the Lot Owner shares a boundary fence with a neighbouring property outside of the strata scheme then it will usually become a claim for 50% of the portion of damage / cost. This portion of the claim may still be made through the strata company’s strata insurance policy, less any applicable excess.

There are some exceptions to the above. For your fence not to be considered a claim can relate to a lack of maintenance as a primary cause for the fence to fall over e.g. heavy vegetation leaning on the fence, subsidence & erosion of the soil holding the fence in place and previous cracking etc. Other exceptions can be your strata policy wording has exclusions, such as age limits placed on the age of the fence that you can claim for or imposed excesses.

A strata may have bylaws in place that state owners need to pay the excess, so you may need to take this into consideration also.

If your property was a survey strata scheme and you individually insuring your Lot then you would be responsible to pay your 50% portion, but I assume you are referring to a strata scheme with combined insurance arranged as Residential Strata Insurance.

It would be best to refer your query to the Insurance Broker or Insurer whom the insurance arrangement is made with.

Leonie Milonas PSC Property Lync Insurance Brokers E: leonie@lyncinsure.com.au P: 1300 127 503

This post appears in Strata News #365.

Question: If a unit owner in WA makes a claim against the Strata Company’s insurance for a fusion claim, is the Strata company entitled to insist the unit owner pays the insurance excess?

Answer: In general, it is the Strata Company as they have purchased the insurance policy.

Please note: this response was provided prior to the proclamation of the new strata title amendments.

It is my understanding the Strata Titles Act does not stipulate who pays an excess and in general, it is the Strata Company as they have purchased the insurance policy, which at the time of negotiation outlines the level of premiums and excess.

This is a strata matter and the Strata Company may have a cost recovery By-law in place or similar passed at a General Meeting which may allow the Strata Company to pass on the excess payment to the lot proprietor.

Leonie Milonas PSC Property Lync Insurance Brokers E: leonie@lyncinsure.com.au P: 1300 127 503

This post appears in Strata News #325.

Question: A neighboured damaged the strata boundary fence. Insurance will cover the cost of repair, but who pays the excess?

A neighbour who is not part of the strata, drove a quad bike through the strata fence which forms the back boundary of my lot and damaged it quite badly.

The neighbour has offered to fix the fence himself, but by merely re-using the damaged panels. This means that the fence would not be restored to the original state.

The strata insurance will cover the cost of a professional repair. Am I responsible for the insurance excess as the damaged portion of the fence is in effect my back fence.

Answer: You are entitled to have the decision reviewed by the insurer’s Internal Disputes Resolution Team.

Please note: this response was provided prior to the proclamation of the new strata title amendments.

There are a couple of important points with boundary fence damage:

Strata insurance will generally cover damage to the damaged fence panels only, not the whole fence or any other portion of the fence that is not damaged. You do need to refer to your insurer PDS policy wording, for specific coverage.

If the fence is a boundary fence, generally you are only covered for 50% of the cost to repair it, as the neighbour on the other side is responsible for the other 50%. If it’s an internal strata boundary fence between owners of the strata, it would be 100% of the cost.

Excess payments are in line with the arrangement of the strata insurance. Generally, the strata company would pay the excess of a boundary fence, but you should refer back to the strata manager or the council of owners, who arranged the policy and to ascertain what has been agreed as this may vary.

Leonie Milonas PSC Property Lync Insurance Brokers E: leonie@lyncinsure.com.au P: 1300 127 503

This post appears in Strata News #280.

Question: After Cyclone Veronica, units in our complex now have mould. Is mould covered by insurance or would this be a lot owner problem?

We have an investment property in Port Hedland. The unit is in a Strata complex of 23 units.

After the recent cyclone Veronica, 4 of the units have suffered Mould issues on the walls from top to bottom. Is mould covered by insurance or would this be lot owner responsibility? How do we find out the cause of the mould problem to let the insurance company know?

Even though our unit is not directly affected, our property manager has suggested we keep our air conditioner running at our cost to prevent mould from forming in our unit.

Answer: Depending on the strata insurance company involved, mould may not even be covered.

Please note: this response was provided prior to the proclamation of the new strata title amendments.

Depending on the strata insurer PDS mould may be covered or not. I would suggest the Lot Owners ask their current insurer.

Mould is a difficult issue and you should refer to a builder and your insurer to assess e.g. poor ventilation; the property sustained rainwater damage from a cyclone.

Leonie Milonas PSC Property Lync Insurance Brokers E: leonie@lyncinsure.com.au P: 1300 127 503

This post appears in Strata News #247.

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