Considerations for Adjoining Property Construction in Strata Insurance

Understanding the Challenges

Adjoining property construction projects can be a source of inconvenience for strata property owners in Australia. Obstructed views and noise are just some of the challenges strata owners face. In this article, we will explore the essential factors you should consider when dealing with construction near your property.

Insurance Considerations

First and foremost, it's crucial to address the insurance aspect. Many insurance policies have conditions and exclusions regarding construction works exceeding specific thresholds, typically in the range of $250,000 to $500,000. Failing to notify your insurer before such works commence can result in the exclusion of coverage. However, the extent of how this exclusion applies is not always clear as polices don’t specify whether it applies only to works inside the insured building or whether it can be applied to an adjoining property. To err on the side of caution, it's recommended to notify your insurer.

When notifying your insurer, they will likely request several documents:

Scope of Works: A comprehensive document that outlines the works to be completed by the contractor under the construction contract.

Certificate of Currency for Construction Works Insurance and Public Liability Insurance: Proof that the builder or developer holds adequate insurance.

Timeline: Information on when the construction works are scheduled to begin and conclude.

In addition to the general construction exclusion, some policies might also exclude damage caused by vibrations, removal, or weakening of support structures. If such damage occurs due to construction activities, obtaining coverage may become challenging. To protect your interests, it's vital to take specific actions.

Taking Legal Advice

Consulting a legal practitioner specialising in construction law is a prudent step. In some cases, developers may require your permission to conduct certain works, particularly if it involves activities like crane operations over your property or underpinning works. Engaging a legal expert allows you to understand your rights and negotiate favourable terms or entering into a Deed of Agreement with the developer.

Dilapidation Reports

You may want to request a Dilapidation Report, which documents the condition of your property before construction begins. This report helps establish a baseline for your property's state, aiding in potential claims for damage caused by the construction.

Digging Deeper into Insurance

It's recommended that you consult with your insurance adviser to review the policy's wording and schedule, in order to gain a thorough understanding of any terms, conditions, or exclusions that may be pertinent to the construction works.

Conclusion

In conclusion, when neighbouring properties undergo construction, it's imperative to be well-prepared. Not only should you consider insurance matters, but also legal advice and a thorough assessment of the potential impacts on your property. By taking these steps, you can safeguard your strata building and ensure a smoother experience during the construction process.

Before any work begins, reach out to a construction legal practitioner, insurance adviser and your Strata Manager for guidance. For more valuable information on strata insurance and related topics, follow Strata Insurance Solutions on LinkedIn and YouTube.