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 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.