WA: Q&A Seeking Reimbursement for Water Leak Expenses

These questions are about insurance and reimbursement for out of pocket expenses relating to water leaks in strata properties.

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Table of Contents:

• QUESTION: A claim for a unit’s water damaged vanity was refused because the insurer couldn’t differentiate between the existing and the new damage. If fixed items like this in a unit are damaged, who covers these items?
• QUESTION: The carpet in our unit was damaged caused by water ingress through a common property wall during a severe storm. Who is responsible for the cleanup and possible replacement of our carpet?
• QUESTION: Our apartment building’s reticulation floods our storage locker. Many items have been damaged or destroyed. Who is responsible?
• QUESTION: My apartment flooded due to a kinked pipe bursting. Should strata make an insurance claim and reimburse me for loss of rent and damage to my apartment?
• QUESTION: A water cylinder slowly leaked from an upper floor over a number of weeks/months and was not noticed because the apartment below was vacant. Who has to pay for repairs?
• QUESTION: Water leaks have resulted in loss of rent and repair costs. Shouldn’t we be reimbursed for our out of pocket expenses from the insurance and the Council of Owners?
• QUESTION: We have a shared water meter and divide usage between 4 units. One lot owner is refusing to pay their portion. How do we handle this situation?
• QUESTION: Should a damaged water meter be covered by the Building Insurance or the Sinking Fund and not individually by the owner?
• QUESTION: A roof leak in the strata car park has caused significant damage to my car, corroding paint work, as well as corroding and staining accessories that I have had added to the car. Who is responsible for the cost of the repair?

Question: A claim for a unit’s water damaged vanity was refused because the insurer couldn’t differentiate between the existing and the new damage. If fixed items like this in a unit are damaged, who covers these items?

Our strata insurance assessor said there was existing water damage and new water damage on a unit’s vanity from a huge amount of water entering the unit’s bathroom from the ceiling. He was unable to differentiate between the existing and the new damage and the claim for the new vanity was refused.

The lot owner has landlord insurance, however, the insurer states they do not cover things like vanities, stoves cooktops, etc. If they are damaged, who covers these types of fixed contents that belong to the owner?

Answer: Try to locate the insurer at the time of the first amount of water damage.

This is quite a tricky question. There are potentially two claims here.

Insurers don’t always get claims right. We have disputed a number of claims over the years. Don’t always take what an insurer says as being verbatim and correct. Sometimes you do need to challenge insurers.

How long has the insurer been on risk here? Have they been the insurer for the last 10 years and were they likely the insurer at the time of the first incident?

I wouldn’t let the insurer off the hook in this instance. I would first try to locate the insurer at the time of the first amount of water damage. What you could do here is get a builder of some sort to inspect the property, have a look at the water damage and give their view on how old that water damage is. Then you might look to lodge a claim on the first insurance policy when the first claim happened. That may cover off on repair of all damage, except for if there was extra water damage that applied to the second claim.

You really need a good insurance broker in this claim because this is a very complex matter. But first, you should look at the first claim and try to make a claim under the policy. There’s no time limit under insurance. Then you would go back to the second insurer on the second claim and try to make any additional claim thereafter.

Who covers fixed contents that belong to the owner?

It is the strata insurance that does cover it but if there’s an exclusion in the policy it obviously doesn’t apply in that case.

Tyrone Shandiman
Strata Insurance Solutions
E: [email protected]
P: 07 3899 5129

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 Advisernet Australia AFSL No 240549, ABN 15 003 886 687.

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

Question: The carpet in our unit was damaged caused by water ingress through a common property wall during a severe storm. Who is responsible for the cleanup and possible replacement of our carpet?

We had water ingress through a common property wall into our apartment that has soaked the carpet. This was caused by severe water ingress into the building as the result of a storm. The common areas such as the lift, stairwell and foyer all experienced flooding. In our situation, the water ingress came through a common property wall.

Who is responsible for the cleanup and possible replacement of our carpet? The strata say we need to contact our own insurer, as carpets are the responsibility of the lot owners.

Answer: Strata policies follow legislation and therefore, exclude cover for damage to carpet. The owner needs to claim under their contents insurance.

Section 53 of the Strata Titles Act 1985 defines “building” for insurance purposes as:

53. Amendment of strata lease

any building on the parcel for a scheme whether shown on the strata/survey-strata plan or not and also includes —

1. (a) proprietors’ improvements and proprietors’ fixtures forming part of the building including paint and wallpaper but excluding carpet and temporary wall, floor and ceiling coverings

Strata policies follow legislation and therefore they will exclude cover for damage to carpet, which is why an owner needs to claim under their contents insurance.

Tyrone Shandiman
Strata Insurance Solutions
E: [email protected]
P: 07 3899 5129

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 Advisernet Australia AFSL No 240549, ABN 15 003 886 687.

This post appears in Strata News #539.

Question: Our apartment building’s reticulation floods our storage locker. Many items have been damaged or destroyed. Who is responsible?

Twice per week our apartment building’s reticulation system causes flooding to our storage locker.

This has resulted in several items being absolutely destroyed including 2 large rugs, a baby car seat, high chair, a wooden bed head and an electric bicycle.

The storage area is now mould infested and anything that is stored in there is totally ruined within weeks. 

Are strata compelled to fix this? Do we have any grounds for compensation regarding the replacement of our things?

Answer: You would be advised to direct your damaged contents to your contents insurer

Maintenance resulting from common property, such as reticulation that is entering places it shouldn’t, needs to be reported to the strata or a strata manager if you have one, to minimise damage to the building and other property.

You would be advised to direct your damaged contents to your contents insurer and, if claimable, they may try to seek recovery for the cost of the claim. They will want to know how the damage occurred.

If the strata or strata manager ignore the issue, you may refer this issue to a strata consultant or lawyer who would advise the best course of action to resolve the matter.

Leonie Milonas
PSC Property Lync Insurance Brokers
E: [email protected]
P: 1300 127 503

This post appears in Strata News #474.

Question: My apartment flooded due to a kinked pipe bursting. Should strata make an insurance claim and reimburse me for loss of rent and damage to my apartment?

I own an apartment in a 5 story development built in 2009. My apartment flooded from a burst pipe. The plumber reported the pipe had a kink in it which eventually caused it to break.

I have asked Strata to make an insurance claim. They do not agreement. The pipe only services my apartment however the faulty is not any fault of my tenants.

The situation has caused my prospective new tenants to get out of the lease. Waiting for the repair plus the time it will take to find a new tenant has resulted in a substantial loss of rent.

Please advise if my insurance claim is valid for both loss of rent and water damage to my unit.

Answer: In instances where there is a disagreement between the owner and committee over whether a claim should be lodged, an insurer should give precedence to insurable interest over committee expectation.

Strata Legislation in all states and territories has a requirement for a strata corporation to take out insurance in accordance with the applicable act.

Generally speaking, a lot owner who has contributed to insurance premiums for a policy covering property they own can demonstrate an insurable interest in the policy – this means in instances where there is a disagreement between the owner and committee over whether a claim should be lodged, an insurer should give precedence to insurable interest over committee expectation.

Where the owner has difficulty lodging a claim through the strata corporation the options available are:

1. Refer the claim directly to the insurer and if they require you to deal through the strata corporation you should to enforce your insurable interest in the policy and request the insurer deals directly with you;
2. In the event the insurer refuses to deal with you, you may go through the insurers dispute resolution processes (in their policy wording);
3. Failing this you may decide to dispute the issue with the strata corporation through the processes recommended by Landgate: Guide to resolving strata disputes

In the case of a burst pipe, subject to the policy terms, conditions and exclusions, the insurer will generally cover “water damage” to property defined as “building” or “insured property” but exclude cover for finding and fixing the burst pipe (i.e. plumbing costs). Additionally, the lot owner is responsible for the excess. If the owner has other property damaged that is not considered building, such as carpet, the owner may need to also lodge a claim under their landlords insurance for this portion of the claim.

Strata insurance covers loss of rent where it can be substantiated by means of a signed agreement that the lot would have leased out. Loss of rent can only be claimed where damage to property covered by the strata policy (i.e. building) is damaged and this makes the lot uninhabitable. In some instances both the strata and contents insurer can be responsible for contributing to loss of rent if both building & contents (such as carpet) is damaged.

Loss of rent under a strata policy generally provides cover up to the point at which the property is re-tenanted.

Tyrone Shandiman
Strata Insurance Solutions
E: [email protected]
P: 07 3899 5129

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 Advisernet Australia AFSL No 240549, ABN 15 003 886 687.

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

Question: A water cylinder slowly leaked from an upper floor over a number of weeks/months and was not noticed because the apartment below was vacant. Who has to pay for repairs?

A water cylinder slowly leaked from an upper floor over a number of weeks/months and was not noticed because the apartment below was vacant. It has caused some damage to the exterior of the building.

The insurance company will not pay for the repair due to the damage being “gradual” and not from a sudden, one-off event. Who has to pay for the building damage rectification, the lot owner or the Strata?

Answer: The strata company would be responsible to rectify and pay for the damage, however there could be a case for recovery of those costs.

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

The question does not stipulate whether the “leaking” water cylinder is located within a unit on the upper floor or external on the common property wall. This could have a bearing on who is ultimately responsible for the rectification costs.

As it is an apartment complex the exterior would be normally common property, however, I am aware of a multi storey complex in Perth where the boundaries of the lot are such that the external lots have their boundaries to the external walls of the complex. On my initial assumption, the strata company under section 35(1)(c) has the responsibility to repair the damage. If the water cylinder was for the use of the upper apartment but located on common property it would be deemed under section 35(1)(c)(ii) personal property vested in the strata company and as such the responsibility of the strata company to maintain. Note it is not the responsibility of a tenant to notify the strata company of any issues. That responsibility rests with the lot owner/property manager.

If the water cylinder was within a unit on the upper floor, the owner would have a responsibility to maintain and repair Schedule 1 By-law (1)(b) and could be held accountable for any damage incurred to property. If the cylinder was on common property the strata company has a responsibility to maintain, service, repair and renew and inspect common property.

Without further information my initial answer would be the strata company would be responsible to rectify and pay for the damage, however, there could be a case for recovery of those costs. Additional information would be required.

Brian Rulyancich
StrataTAC
E: [email protected]
P: 0428 970 067

This post appears in Strata News #332.

Question: Water leaks have resulted in loss of rent and repair costs. Shouldn’t we be reimbursed for our out of pocket expenses from the insurance and the Council of Owners?

I have a common interest with my son in one of 14 apartments in Fremantle. The apartment is rented out as an Airbnb.

Mid last year, a renter rang complaining that the power kept tripping. My son went down to investigated and discovered the ceiling was leaking in the kitchen lounge. We refunded the renters money and contacted the Strata. Initially, the Strata were extremely helpful and organised an electrician to attend quickly and then return on to finalise repairs.

On this follow up visit from the electrician, they discovered a water leak. A plumber was organised and the leak was repaired. We received the electrical safety certificate. The whole process ended up taking around two weeks.

We made a claim from the insurance for compensation for lost income for the two weeks, as we were unable to let the unit until the repairs had been completed.

The insurance company agreed to reimburse only part of the lost income and this doesn’t seem fair to me.

Also, when the plumbers were fixing the ceiling in the lounge and kitchen they discovered the ceiling above the shower was leaking. This was not related to the same burst pipe. We were advised it was a leaking shower from the unit above. This was finally fixed about one month later. The Strata advised they would submit the invoice to the Council of Owners for their consideration. Weeks later we are still waiting for an update.

From my understanding, all walls, floors and ceilings are common property and should be maintained by the Strata. Is this correct?

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.

As I am not your insurance broker I am unable to comment about the specifics of your claims, other than to offer some general information about your rights and ideas on how to proceed.

Loss of Rental Income

Your insurer’s Product Disclosure Statement, as you would be aware, provides reimbursement following an insurable event accepted by the insurer, for Loss of Rent or Temporary Accommodation, when your lot /common property is made unfit for its intended purpose.

Under the Financial Services Review Act, you are entitled to have the decision reviewed by the insurer’s Internal Disputes Resolution Team. See attached an extract from the Longitude PDS for your information.

Leak in the bathroom

As this involves another Lot Owner’s shower recess area, such as waterproofing or re-grouting etc., sometimes it is a little more of a complex matter for the Council of Owners to work through depending on your strata plan and boundary definitions etc.

This part of your query relates to strata management, not insurance and I would suggest you speak to your Council of Owner members or your strata manager to understand the procedure and steps involved to get this matter resolved. Generally, the cause of the water ingress to your ceiling has to be fixed before repairs to the ceiling are undertaken.

Hopefully, this is of assistance to you or maybe contact your strata’s insurance broker for more information.

Leonie Milonas
PSC Property Lync Insurance Brokers
E: [email protected]
P: 1300 127 503

General Disclosure

The responses to the above questions are prepared for informational purposes only, and is not legal advice and should not be relied on as legal or insurance advice. You should consult with a qualified insurance or legal advisor.

This post appears in Strata News #269.

Question: We have a shared water meter and divide usage between 4 units. One lot owner is refusing to pay their portion. How do we handle this situation?

We live in a strata complex of 4 units. Units 1 and 2 are privately owned and we own Units 3 and 4.

We share one water meter and divide the water usage between us. However, Unit 2 has not been in their Unit for most of the last 2 years and I have not been charging them for any water.

Just recently in the last few months, we noticed Unit 2 owners have been returning quite frequently and therefore I charged them a share of the water usage. Now they do not want to pay. Also, we do not have a strata levy bank account, we each pay as the bill is due.

Is there something in the legislation saying the strata owner is responsible to pay for water from a shared water meter regardless of occupancy, or do you have any advice on how I should proceed with the matter?

Answer: In order to settle the payment you would have to apply to SAT.

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

This one can be a little annoying where an owner doesn’t pay their portion of the common property bills and there isn’t any strata police to help. You have done the honourable thing in not charging unit 2 for water that isn’t used by them. However, unfortunately, I would never suggest doing it for this exact reason.

Unless you have meters that say unit 2 has used ‘xyz’ amount of water, the common property water bill should be divided by what is agreed upon by the strata company – which I would suggest is by unit entitlement or simply divided by the number of units.

In order to settle the payment, you would have to apply to SAT. Which might not be worth the amount of money in question.

My best suggestion would be to look into installing separate water meters. Take a look at this information from Water Corp with the further necessary forms for application to install meters.

The costs involved can vary greatly from property to property. This is definitely worth investigation. Treatment without prevention is simply unsustainable!

Jordan Dinga
Abode Strata
E: [email protected]
P: 08 9368 2221

This post appears in Strata News #243.

Question: Should a damaged water meter be covered by the Building Insurance or the Sinking Fund and not individually by the owner?

I live in a block of ten units. All the water meters are placed by the footpath, uncovered and unprotected. Recently my water meter was vandalised. Although the damage was not major and the water meter is still in good working order, the Water Board says any repairs to a damaged water meter are to be paid by the owner. This is regardless of who, what or when the damaged water meter was done.

Our Strata Manager is saying that our insurance wouldn’t cover the owner’s cost because is not a “maintenance issue”…??? I believe that she is wrong. The bank of water meters is within strata boundaries and is therefore common property, albeit measuring individual unit’s usage.

I believe any cost to repair the damage, in case of property vandalism within the Strata, should be covered by the Building Insurance or the Sinking Fund and not individually by the owner.

Answer: If this is a standalone meter for your unit and neither insurance nor the strata company bylaws covers the issue, it is an exclusive service and as such owner responsibility.

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

There are a few facts that would need to be established:

1. Is this an individual water meter or a sub meter?
2. Do the strata company bylaws deal with water/gas/electricity meters?
3. Has the question been asked of our insurance company, do they deem the meter to be a fixture to common property and if so is it covered under insurance?

Subject to clarification of the above:

• As the meter is still functioning this is not an essential replacement and as such owner responsibility.
• If this is a standalone meter for your unit and neither insurance nor the strata company bylaws cover the issue, then it is as the strata manager says an exclusive service and as such owner responsibility.

Gary Phillips
StrataGP
E: [email protected]

Please note this advice was provided prior to the proclamation of the new strata title amendments and will be updated in due course.

This post appears in Strata News #182.

Question: A roof leak in the strata car park has caused significant damage to my car, corroding paint work, as well as corroding and staining accessories that I have had added to the car. Who is responsible for the cost of the repair?

Just looking for a little advice/clarification if you are able.

I am a tenant living in an apartment complex which has an underground strata car park.

During last year’s storms, the roof of the car park leaked all over the place, in storerooms and on cars.

The leak over my car bay caused significant damage to my car, corroding paintwork, as well as corroding and staining accessories that I have had added to the car.

I have sent a letter of demand off to both the strata and the real estate property manager stating what the costs of repair are and that I am currently holding all parties (strata/real estate agency/ owner) accountable.

This failed to achieve the desired resolution with no one taking responsibility.

I am now looking to take this case to court, but to do so I need to know who is actually accountable to pay for the damages. Are you able to tell me who is accountable in such instances, or point me in the right direction to find more?

Answer: Taking the parties to court should be the last resort.

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

• Motor Vehicle Insurance
  In the first instance, we would generally recommend lodging an insurance claim with your car insurer to promptly repair the damage as quickly as possible. The damage would be taken care of, and the responsibility would lie with your car insurer to pursue the relevant ‘accountable’ party(ies) for the associated recovery costs. By using the car insurer, you would be able to avoid the expense and hassle associated with taking another party to court.
• Letters of Demand, accountability & next steps
  To point you in the right direction regarding accountability, it is very difficult to give a clear-cut answer as it really all depends on a number of factors i.e. the specific circumstances of the ‘event’, the reason(s) why it is believed the parties mentioned are responsible, and also the response to the Letters of Demand from each recipient.

  Although unclear in this situation, it is reasonable to expect that the Letter of Demand sent to the Owners Corporation would be sent on to the Liability insurer as a potential claim notification. Based on this assumption, prior to going to court, we encourage you to ensure all avenues are exhausted with the respective liability insurers. Taking the parties to court should be the last resort. If the insurer is aware of the potential claim, it is likely they will want to avoid costs associated with the court system and reach a resolution before this point.

Whitbread Insurance Brokers
E: [email protected]
P: 1300 424 627

Please note this Q&A response is not intended to be personal advice and you should not rely on it as a substitute for any form of advice. Please contact Whitbread Associates Pty Ltd ABN 69 005 490 228 Licence Number: 229092 trading as Whitbread Insurance Brokers for further information.

Please note this advice was provided prior to the proclamation of the new strata title amendments and will be updated in due course.

This post appears in Strata News #125.

Have a question about reimbursement for water leak expenses or something to add to the article? Leave a comment below.

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Read next:

• WA: Maintenance Planning and Insurance: The Strata Titles Amendment Act 2018 (STAA 2018)
• WA: Q&A Plumbing Problems in My Unit. Who pays for Investigating the Cause?

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