Question: Some owners in our building have carried out plumbing repairs in their lot without using an authorised tradesperson. If the plumbing fails, who is liable for the water damage in both their, and possibly other, lots?
We are building managers. We have a plumbing issue with the water hose inside the toilet cistern at one of the sites we manage. Some owners have replaced the hose themselves without using a licenced plumber. If that hose fails for some reason and causes flooding to their and possibly other apartments, who is liable? Can we claim on that particular owner’s insurance policy rather than the CoO’s policy?
Answer: The first consideration may be to lodge a claim under strata insurance – this is often the easiest option.
In such claims, the first consideration may be to lodge a claim under strata insurance – this is often the easiest option.
However, if the strata corporation (or another owner whose lot has been damaged) believe the damage has been caused by a negligent act of a lot owner, for example, the repairs conducted were not done by qualified parties despite concerns being raised with the lot owner, prior to commencing an insurance claim they have the option of writing a letter of demand to the lot owner seeking compensation for repairs. The letter would need to state their reason for seeking compensation.
The lot owner has 3 options available:
- Lodge a public liability claim under contents/landlords insurance: If the owner has contents/landlords insurance, most policies will have a public liability section designed to cover claims for compensation associated with property damage. The owner will need to refer the letter of demand to their contents/landlords insurer to commence a claim and the insurer will consider the grounds of the demand and make a settlement or deny the demand on behalf of the lot owner.
- Lodge a claim under strata insurance: Whilst the committee may have other desires for claiming on the strata insurance, generally speaking, a lot owner who has contributed to insurance premiums for a strata policy 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 may give precedence to insurable interest over committee expectation.
- Deny the demand: The owner has the option of denying the demand if they believe there are no grounds for such a demand.
Claims of this nature can lead to a difference of opinion between the owners and the committee on which policy to claim under. If a claim is not made under strata insurance and demand is made to the lot owner with the leaking cistern instead, ultimately, the decision on the above three options is one for the lot owner.
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.