Navigating Recoveries in Strata Insurance

What is a Recovery?

A recovery in the context of strata insurance occurs when damage to your building is caused by a third party who is not insured by the policy. These situations can take various forms, from a car accident damaging your strata property to a builder or tradesperson's work inadvertently causing harm. In such instances, a claim is initiated.

Insurers have a two-fold approach when a claim is made. First, they take immediate action to repair the damage and ensure your well-being. At the conclusion of the claim, once all expenses are tallied, they initiate a recovery action.

The Timing of Recoveries

It's essential to recognise that recoveries do not always happen swiftly. The process can be prolonged, and several factors impact the timing. This is crucial to understand, especially when it comes to policy renewal. From an underwriting perspective, insurers consider claims not yet recovered and only classify them as $0.00 claims once the funds are fully recouped. This approach is grounded in the uncertainty of recovery, as there's no guarantee that the responsible party will fulfil their financial obligations.

Protracted Recovery Timelines

Recovery processes can span across multiple policy periods. This prolonged timeline can result in an adverse claims history for the body corporate, until the insurer successfully recovers the funds. It's essential to be patient and to realise that the claim might have a lasting impact on your policy.

Ethical Considerations

Insurance companies operate under specific ethical guidelines. As such, there are scenarios where they may opt not to pursue recoveries. This is typically the case when moral concerns are tied to the incident. For instance, insurers do not attempt to recover from emergency services like the police and fire departments. Additionally, there are instances, such as financial hardship or suicides, where insurers may choose not to seek recovery. However, it's worth noting that when insurers decide not to recover, it can still affect your claims history. Hence, it's vital to be aware of these nuances in the process.

Conclusion

In conclusion, understanding the dynamics of recoveries in strata insurance is pivotal for making informed decisions and navigating the complexities of claims. With its wealth of knowledge and expertise, Strata Insurance Solutions strives to provide clarity in this area.  My name is Tyrone Shandiman, and we invite you to follow us on LinkedIn and YouTube for more strata insurance insights like this one.