After the impact of ex-Tropical Cyclone Alfred on southeast Queensland and northern New South Wales, many strata communities face strata insurance claims and other challenges. This article address some of these issues, helping owners, committees, and strata managers to understand their responsibilities and the steps involved in the recovery process.
Table of Contents:
- Question: What options are available if an owner’s insurance claim is denied on the basis of poor maintenance by the body corporate?
- ARTICLE: NSW & QLD: Aftermath of Cyclone Alfred: Essential insights for strata communities | Bruce McKenzie, Sedgwick + Tyrone Shandiman, Strata Insurance Solutions + Will Marquand, Tower Body Corporate – March 2025
Question: What options are available if an owner’s insurance claim is denied on the basis of poor maintenance by the body corporate?
This article has been submitted by a QLD owner. The information is also applicable for our NSW audience.
Following the big storm in Brisbane on 9 March, I noted water ingress down the wall and vent pipe casing of my bedroom ensuite. A short time after, there was evidence of water damage.
A plumber reported that the ingress was caused by penetration of the sewer vent pipe flashing on the roof. A temporary fix was undertaken to prevent further leaks.
An assessment of the damage to my ensuite identified that a full refurbishment is required. I initiated a claim for damages against the body corporate insurance policy.
The claim was denied on the basis of “poor or inadequate maintenance” on the part of the body corporate: “gradual deterioration, wear and tear, and faulty workmanship, design and specification” — i.e. not attributed to a single event.
What avenues of redress are available to me?
Answer: A denied water damage claim can often be challenged, especially if the damage was caused by a major storm. Review the policy, insurer’s reasoning, and reports — and seek advice from your broker or AFCA, if needed.
When a claim is denied, it can be understandably frustrating — but it’s important to carefully assess the reasons for the denial and explore the appropriate avenues for redress.
While the insurer has denied the claim based on common exclusions such as “gradual deterioration, wear and tear, faulty workmanship, design or specification,” it’s important to understand that such exclusions do not always mean the claim is not valid. These types of denials are frequently challenged — and successfully so — particularly when there is a clear triggering event (in this case, a significant storm).
I recommend reviewing the following resources, which outline important considerations for strata insurance water damage claims:
If you lodged your claim through an insurance broker, your first step should be to seek their advice on whether the denial is fair and in line with the terms of the policy. Brokers are well-placed to assess the insurer’s reasoning and help you challenge the decision if necessary.
It’s also important to obtain and review any reports relied on by the insurer (e.g. from a plumber, assessor, or engineer). Consider:
- Does the report accurately describe the cause of the damage?
- Were the alleged maintenance issues previously known to or raised with the body corporate?
- Did the storm contribute significantly to the loss — and if so, was it the primary or proximate cause?
In many cases, claims are denied based on exclusions such as “gradual deterioration” or “poor maintenance,” but if a major storm was a key factor causing the damage, the exclusion may not apply in the way the insurer has claimed.
If you remain unsatisfied after internal review or reconsideration by the insurer, you may lodge a dispute with the Australian Financial Complaints Authority (AFCA), which is free and impartial.
If the cause of the water ingress relates to an element of common property, it may be appropriate to consider whether the body corporate has a responsibility under the Body Corporate and Community Management Act 1997 (BCCM Act) or similar legislation in your state to maintain that area in good condition. In such cases, it’s not uncommon for lot owners to raise concerns or questions about whether maintenance obligations were met.
If the body corporate concludes that there may have been a lapse in maintenance which contributed to the loss, one avenue available could be to lodge a public liability claim under the strata insurance policy. Public liability sections typically do not exclude claims arising from poor maintenance, unlike the property section.
These situations can be challenging for both lot owners and committees, but a thoughtful, cooperative approach helps ensure all parties meet their responsibilities while working toward a fair outcome.
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.
This post appears in Strata News #751.
Following the significant impact of ex-Tropical Cyclone Alfred on southeast Queensland and northern New South Wales, many strata communities are facing strata insurance claims and other challenges. To address these issues, LookUpStrata hosted a crucial webinar titled “NSW & QLD: Aftermath of Cyclone Alfred: Essential insights for strata communities”. This session aimed to provide essential insights for owners, committees, and strata managers to understand their responsibilities and the steps involved in the recovery process. The panel of experts included Bruce McKenzie from Sedgwick, Tyrone Shandiman from Strata Insurance Solutions, and Will Marquand from Tower Body Corporate, each offering their unique perspectives on navigating the aftermath.
NSW & QLD: Aftermath of Cyclone Alfred: Essential insights for strata communities | Bruce McKenzie, Sedgwick + Tyrone Shandiman, Strata Insurance Solutions + Will Marquand, Tower Body Corporate – March 2025
The session covered several key areas designed to equip strata communities with the knowledge to effectively manage the aftermath of an emergency. Discussions encompassed the tracking of insurance claims and the common challenges encountered by policyholders. Insurers received a significant number of strata insurance claims after ex-Tropical Cyclone Alfred from policyholders across southeast Queensland and northern New South Wales. This number is expected to rise. The ICA also declared an Insurance Catastrophe, prioritising the industry’s response for affected policyholders.
The webinar also addressed the crucial distinction between damage covered by strata insurance policies (such as cyclone damage under standard policies) and damage that might be considered maintenance or otherwise not covered, like gradual deterioration or lack of maintenance. Common building elements particularly vulnerable to damage following severe weather events were highlighted, along with common exclusions in strata insurance policies relevant to cyclone aftermath, with a note that flood cover might be optional. The implications of the Cyclone Reinsurance Pool for strata properties post-Alfred were also discussed.
The importance of effective communication when dealing with strata emergencies
Effective communication with residents throughout the repair process, especially regarding potential delays and the scope of work, was emphasised as a vital aspect of managing a crisis. The panel underscored the importance of keeping residents informed and managing expectations during a challenging time.
A number of pertinent questions were addressed during the webinar. These included understanding the common reasons for delays in the insurance claim assessment and approval process following widespread damage from ex-Tropical Cyclone Alfred, and how owners and committees could proactively address these delays. Another key question focused on how owners and committees could effectively differentiate between damage covered by their strata insurance (e.g., cyclone damage) and damage considered maintenance or not covered.
For strata buildings experiencing strata insurance claims for water ingress or other damage after Cyclone Alfred, the webinar offered practical steps for owners and strata managers:
- Document the damage: Where possible, document any damage with photos and videos. Create a list of damaged items, including the brand, model, and serial number if you can. Keep records of communications, including phone calls, text messages, and emails.
- Begin the clean-up: You don’t need to wait for your insurer to assign an assessor before starting the clean-up. Dispose of items that cannot be repaired, especially if they pose a health risk. If you believe something can be repaired, keep the item and inform your insurer when making your claim.
- Speak to your insurer: Lodge your claim as soon as you can, even if the full extent of the damage isn’t yet known. Contact your insurer directly before attempting or authorising any building work.
- Strata committees should communicate effectively: Keep residents informed about the progress of insurance claims, repair timelines, and any potential delays. Designate a site contact and establish an information hub for residents during larger emergencies.
- Expedite insurance claims: Following a catastrophe declaration, owners and strata committees should take practical steps to expedite the insurance claim process and ensure timely assessment of damage. This includes providing comprehensive documentation and maintaining clear communication with the insurer.
To help buildings get ready for the next emergency situation, the experts emphasised several preventative measures:
- Regular maintenance: Ensure stormwater and water systems are well-maintained, with drains cleared and surcharge paths unobstructed. Consider more frequent building inspections and address minor issues proactively.
- Financial preparedness: Maintain adequate funds in the sinking fund to enable swift action for repairs and emergency measures.
- Forward planning: Committees should engage in forward planning to assess the building’s resilience to intense weather events and develop emergency response plans. This includes having communication templates, evacuation plans, and lists of essential contacts readily available.
- Engage licensed contractor: Always use licensed and reputable contractors for any repair work and verify their credentials.
- Record keeping: Maintain comprehensive records of maintenance, communications, and actions taken during and after emergencies.
In conclusion, the LookupStrata webinar on the aftermath of Cyclone Alfred provids crucial and timely insights for strata communities grappling with the impact of the event. By understanding the insurance process, taking proactive steps in the recovery, and implementing preventative measures, strata owners and committees can navigate the current challenges and build greater resilience for future emergencies.
Presenters
Bruce McKenzie
Sedgwick
E: bruce.mckenzie@au.sedgwick.com
P: 1300 735 720
Tyrone Shandiman
Strata Insurance Solutions
E: tshandiman@iaa.net.au
P: 1300 554 165
William Marquand
Tower Body Corporate
E: willmarquand@towerbodycorporate.com.au
P: 07 5609 4924
This post appears in Strata News #736.
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Read next:
- NAT: Q&A Yearly Increases To Strata Insurance
- NAT: Q&A Water Damage Insurance Claims and The Excess in Strata Properties
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