It is hard to predict when strata lot owners or body corporates find themselves in a situation where they need to lodge a claim. From unforeseen weather disruptions to overnight leakage, there are many external factors to be aware of. When this occurs, the lot owner or body corporate must navigate through a world of damage and repairs, amidst lodging a claim and monitoring its progress.

Let us give you a breakdown on what you need to know when you need to make a claim.

Understanding Responsibility:

Firstly, it is important to understand the difference between “responsibility to maintain” and “responsibility to insure.” This is a common area of misunderstanding in strata.

Depending on the legislation in the state you reside in, some strata insurance policies will insure what they define as building that a lot owner has a responsibility to maintain. If it is damaged, then the first consideration for a claim is strata insurance (which is maintained by the body corporate).

If both the property and/or contents are damaged, it is important to know what strata insurance covers and what it does not. If you have property owners or contents insurance, we also advise that you know what it covers and what it does not. If you must lodge a claim, you may have to do so under the two policies for separate items.

Is Someone Else Responsible for Damage?

If someone else is responsible for damage to your property you may:

1. Lodge a claim on the applicable insurance policy (strata or contents) and if your insurer believes they should recover from another party they will do so. Strata insurers will not recover from other lot owners in a strata building because they are an insured party under the policy, but you may have the ability to make the responsible lot owner to pay the excess; or
2. Send a letter of demand to the responsible party and have them pay for the damage or lodge a claim under a policy they hold (for example the public liability section of a contents/landlords policy).

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Question from QLD: Can a Lot Owner Make Claim Directly to Strata Insurance?

Question Summary:

We have an owner who has spoken with the insurance company and is getting quotes for damage to tiles and ceiling due to recent water ingress. However, the committee has not had the opportunity to come in and inspect the damage and determine whose responsibility it is.

The lot owners are proposing that the damage is from water damage more than ten years ago and that it is being raised now with a current insurance claim the committee has with the insurance company due to a recent rain event.

There are three units that are impacted by the current claim of which the owner mentioned above is impacted. The current damage is in the living areas and the old damage is in the back bedrooms in the three units. The owners want all the tiles in their units replaced by the body corporate, but the tiles have been drummy in areas where no water ingress has occurred.

We are enquiring if an owner can make a claim directly to the body corporate insurer without the damage being inspected by the body corporate first?

Answer from Strata Insurance Solutions:

From our understanding, some insurers will allow lot owners to lodge claims on strata policies as they have an insurable interest in the policy, which thus, affords them the opportunity to make a claim.

Notwithstanding, if the committee has any concerns about the damage being claimed, they can present their concerns to the insurer and request that an assessor is appointed to the claim to assess the damage claimed.

It is unusual for a committee to come in and inspect a unit. Typically, the owner provides their evidence of the damage or insurers appoint an assessor to do an inspection of the unit.

In this case where three units are damaged, the damage should be submitted as one claim. The body corporate should ask that the other two units are added to the claim so that one excess applies.

In this instance it may be better that the committee request an assessor attend and inspect the premises so that a full understanding of the facts can be provided to the insurer.

To read more:

• What are Strata Insurance Requirements?
• Are My Contents Covered by Strata Insurance?