Question: Our strata scheme’s insurance has expired. Are we covered by a grace period? What if there’s a claim?
Our complex of 55 units does not appear to have renewed its insurance. The strata manager says there is a grace period. Is it legal to have no insurance? What happens if an owner has a claim during this period?
Answer: Insurers generally do not offer grace periods after expiry, so the strata company needs to urgently confirm with the strata manager and broker whether the policy is renewed.
The first course of action would be to ask the strata manager whether the policy has been renewed and just not paid yet. Brokers can often offer extended payment terms. Payment may not be due to the broker for up to 30 days. The policy is still in place whilst the payment is pending.
It is also not unusual for brokers and insurers to issue a copy of the policy schedule after the policy has incepted. Insurers can experience document processing backlogs. However, that does not mean the policy is not in place while the paperwork is finalised.
If the policy has not been renewed with the insurer, that is potentially a problem. Instructions are generally required to be submitted to the insurer the day the policy expires or incepts, and insurers generally do not offer grace periods to place cover after expiry.
A building is required to have insurance in place for full replacement value in accordance with section 97 of the Strata Titles Act 1985 (the Act). Seek further clarification from the strata manager and the appointed broker.
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 and the specific coverage afforded under their policy wording. 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 #796.
Tyrone Shandiman
Strata Insurance Solutions
E: tshandiman@iaa.net.au
P: 1300 554 165
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