Question: A fire caused by a tenant’s car in the basement car park resulted in $400,000 damage. Our insurance premium has now tripled. Do the tenant’s actions, under the “peace and enjoyment” of the common property, make them liable?
A fire in the basement car park caused by a tenant’s car resulted in $400,000 damage. The car was registered but uninsured. The insurers of the strata no longer wish to cover the strata unless the premium is tripled. Is the owner of the unit liable for this. Do the tenants actions under the “peace and enjoyment” of the common property make him liable?
Answer: Unfortunately, it appears the strata corporation will be the party that bears the expense through higher premiums in this instance.
Unfortunately, it appears the strata corporation will be the party that bears the expense through higher premiums in this instance. When there is damage to property, the insurer will review the circumstances and consider if there is an at fault parties they can recover from.
If the tenant was found to be negligent or responsible for the damage, the insurer will consider a recovery against them but for $400,000 of damage that is uninsured, the prospects of a successful recovery against the tenant is unlikely.
In instances where a tenant has caused damage, insurers do not seek to recover against a lot owner for their tenants actions, as it would be difficult to prove legal responsibility under common law and an insurer can not recover from a party insured by the policy (including a lot owner).
Insurers will rate on a three or five year claims history so unfortunately in this instance, it appears the claim will impact your premiums until the claim no longer appears on your three or five year claims history.
This post appears in Strata News #521.
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.
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