QLD: What does Strata Insurance cover? What do we need to disclose?

Published October 11, 2019 By The LookUpStrata Team 24 Comments Last Updated June 10, 2024

This article and Q&A alerts Qld lot owners to what is covered by strata insurance. Are air-conditioning units servicing an individual lot covered by strata insurance and who is responsible when something like faulty fire sprinklers flood a unit?

Table of Content:

QUESTION: The hot water system in my apartment’s kitchen cupboard ruptured, damaging the cupboards. Neither landlord insurance nor strata insurance says they cover the kitchen. What do I do now?

QUESTION: Heavy rain resulted in moisture coming through the tiled roof of our top-floor unit, saturating the insulation and collapsing the roof. Our strata manager says we should lodge the claim with our contents insurer. Isn’t this covered by strata insurance?

QUESTION: The original shutters on our building were PVC. By-laws now require aluminium shutters to be installed. A storm damaged some original PVC shutters. Strata insurance will only replace like for like, so who pays for the upgrade to aluminium shutters?

QUESTION: An owner caused major damage to their garage. The body corporate insurer paid for repairs, and the owner paid the excess. The claim resulted in a substantial insurance increase at renewal time. Insurance did not recover the costs from the driver because the driver was an owner in the building. Is this correct?

QUESTION: A lot owner carrying out unauthorised renovations experienced a leak. Is the owner responsible for the excess? Will insurance investigate the cause of the leak?

QUESTION: My car got damaged due to a blocked drain caused by debris. Is the body corporate responsible? How do we get our car insurance excess reimbursed?

QUESTION: Water entered the unit and damaged the floating floors, caused by improperly maintained body corporate assets. As floating floors are not covered by strata insurance, do I have any way of recovering my costs?

QUESTION: Our insurance excess has increased substantially. Should we adjust our budget to factor in the increase in excess?

QUESTION: If body corporate owners actively maintain and manage their buildings, should they have access to better priced strata insurance?

QUESTION: If a lot owner does not maintain known issues in their lot and this causes damage to common property, are they liable?

QUESTION: Our QLD apartment floor was damaged due to a water leak in the drainage pipe behind a dishwasher. The complex is 2 years old and we purchased off the plan. If we wish to claim the damage on insurance, is there a time limit for reporting?

QUESTION: Does the body corporate have a duty to disclose defects reports to their broker/insurer when renewing their insurance cover?

QUESTION: My strata unit had internal water damage from a leaking roof following a weather event. I’ve paid for the roof repair but been told the internal damage is my responsibility and I will only be reimbursed up to the amount of the Body Corporate insurer panel builder’s quote. Is this right?

QUESTION: Lack of maintenance to a shower caused damage to a hallway. Is the owner responsible for the repairs to common property? How is the insurance claim handled?

QUESTION: A lot owner reversed their car into common property. The claim for damage was made through the building insurance. Can the Committee pursue the driver for the excess and how?

QUESTION: Can an owner make a claim directly to the body corporate insurer without the body corporate inspect the damage and determine responsibility?

QUESTION: A overflow sewerage pipe caused damage to carpets. Body corporate insurance removed all carpets, but say they are not responsible for the replacement. Is this really a lot owner’s responsibility?

QUESTION: The gardener handyman does not carry any insurance. Is he covered under the Body Corporate insurance?

QUESTION: Who is liable if a fire sprinkler is faulty and it is activated in an apartment causing water damage to a lot owner’s property?

QUESTION: Our Strata insurance covers the building, however, I’m responsible to maintain my exterior walls, windows and doors. If this is the case, can I reduce my contribution to the BC insurance?

QUESTION: We are trying to figure out if the roof on our building is covered under our building insurance policy.

QUESTION: What insurance claims can be made when a pressure value fails, resulting in damage to carpet, gyprock and kitchen cupboards? The pipes service a number of units in a high rise building?

QUESTION: How much do historical claims impact the upcoming year’s strata insurance premium? Is there a ratio?

QUESTION: Is it possible to insure a Retaining wall? I have tried to insure the retaining wall with my home and contents insurance but the insurance company will not commit.

QUESTION: I am a new owner in a strata building. How do I find out what is common property and covered by the body corporate insurance? How about changes to my lot that have been made over time. Is there a record of these and what is covered by the insurer?

QUESTION: The committee is aware of asbestos in the fire doors but do not wish to disclose this to the broker or the insurer. They’ve engaged an insurer directly. What should the Body Corporate Managers do in this scenario in terms of due diligence and compliance?

QUESTION: I own an investment unit in a strata building and I have landlord insurance. What is covered under my landlord insurance and what is covered under my strata insurance?

QUESTION: Are the compressor units on the roof and the header units inside the apartment, together comprising my air conditioning unit, covered under Strata insurance or my personal contents insurance?

ARTICLE: Is Your Air conditioning Unit Covered By Strata Insurance?

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Question: The hot water system in my apartment’s kitchen cupboard ruptured, damaging the cupboards. Neither landlord insurance nor strata insurance says they cover the kitchen. What do I do now?

I have an apartment in a body corporate in Queensland. My hot water system is in my kitchen cupboard. It ruptured and leaked, damaging the cupboards. The landlord insurance company says they are not responsible for kitchen cupboards and this should be covered under my strata insurance. My strata says their insurance does not cover “kitchen, bathroom and bedroom cupboards”. What do I do now?

Answer: Permanent fixtures such as built in cabinetry are considered part of the building and only insurable under a strata policy.

The definition of building under a strata policy is generally worded along the lines of: Building means buildings as defined in the strata legislation that applies where your building is situated. Permanent fixtures such as built in cabinetry are considered part of the building and only insurable under a strata policy.

A strata insurance policy can’t provide coverage for a building that does not meet the requirements of the applicable legislation. In Queensland, various regulations apply to body corporates depending on which regulation module your scheme is registered under. However, the intentions are all the same. I have referenced the Body Corporate and Community Management (Standard Module) Regulation 2020 as an example.

Part 6 Insurance – Section 195 defines building as:

building includes improvements and fixtures forming part of the building, but does not include—

temporary wall, floor and ceiling coverings; or

fixtures removable by a lessee or tenant at the end of a lease or tenancy; or

mobile or fixed air-conditioning units servicing a particular lot; or

curtains, blinds or other internal window coverings; or

carpet; or

mobile dishwashers, clothes dryers or other electrical or gas appliances not wired or plumbed in.

The above list of excluded items does not include built in cabinetry, therefore, the act requires it to be insured as part of the building under strata insurance.

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 #697.

Question: Heavy rain resulted in moisture coming through the tiled roof of our top-floor unit, saturating the insulation and collapsing the roof. Our strata manager says we should lodge the claim with our contents insurer. Isn’t this covered by strata insurance?

Answer: Ask your strata manager for confirmation.

If you have a strata management agency advising you that the responsibility is yours, they should have supported the advice with documentation demonstrating that this is the case. If they haven’t done this, ask for confirmation.

Your manager could send you a copy of the responsibility documents provided by the BCCM to highlight the areas of responsibility. They might also send you relevant insurance documents, if applicable.

Actual responsibility will depend on several factors, starting with which module you are in – standard format or building format. Then, you have factors such as where the repair is required. Is it inside the boundary of the lot or on the border? You must also consider any by-laws that might affect the issue, such as an exclusive use right.

In terms of whether the matter is an insurance claim, the body corporate manager couldn’t answer this specifically themselves. And, as an owner who pays into the body corporate funds for insurance coverage, you are entitled to make a claim as you see fit. If your manager or body corporate won’t help you with this, you can contact the insurer or broker directly.

Generally, the body corporate insurance will cover resultant damage to the building but not repair of the cause of the damage. If you have a broken tile in your roof that leads to ceiling damage, the repair of the ceiling may be covered, but either you or the body corporate would have to repair the tile.

From your description, the repair of the ceiling may apply as a claim. However, there may also be an excess, and these days, the excess rates for water damage tend to be high. It’s possible that a claim would be under the excess, reverting the costs to you or the body corporate. Or, if the repair costs were greater than the excess, you would be responsible for paying the excess if the claim was only for your lot.

There are multiple variables at play here. Without having all the details, there is no reason to believe the advice from your strata manager is incorrect. It may not be the advice you want, but the manager has done their job correctly if they have provided a rational explanation.

I note from your email that you only state what you think has happened. That’s fine, but if you want to challenge the position of the body corporate, you will probably need the advice of an expert to support your view. Your next step would be to book a contractor or push ahead with the insurance claim.

William Marquand
Tower Body Corporate
E: willmarquand@towerbodycorporate.com.au
P: 07 5609 4924

This post appears in Strata News #691.

Question: The original shutters on our building were PVC. By-laws now require aluminium shutters to be installed. A storm damaged some original PVC shutters. Strata insurance will only replace like for like, so who pays for the upgrade to aluminium shutters?

PVC shutters were installed on individual apartment balconies when the complex was built around 2008. Shutters are included in the body corporate building insurance. Building compliance by-laws now requires shutters to be made of aluminium rather than PVC. A recent storm caused damage to shutters on several apartment balconies. Insurance will only replace like for like.

Who is responsible for the excess from an insurance claim?

Who is responsible for paying the difference between the insurance payout for PVC material and the cost of compliant aluminium material? The difference is several thousand per shutter.

Who decides which quote to accept for replacing the shutters? The cheapest quote may not be the best choice.

Can apartment owners refuse to install aluminium shutters if they cannot afford the cost difference?

Answer: The by-laws cannot typically change the maintenance requirements or place the requirement on an owner to upgrade.

Who is responsible for the excess from an insurance claim?

The body corporate’s ability to allocate insurance excess to a lot owner is regulated by sections 203(3) and 203(4) of the Standard Module, which relevantly provide that for an insurable event affecting:

only 1 lot – the owner of that lot is liable to pay the excess (unless the body corporate decides it is unreasonable in all the circumstances for the owner to bear the liability); and

2 or more lots, or 1 or more lots and common property – the body corporate is liable to pay the excess, unless the body corporate decides it is reasonable in all the circumstances for the excess to be paid for by:
1. the owner of a particular lot; or
2. to be shared between owners of particular lots; or
3. between the owner of a lot and the body corporate; or
4. between owners of particular lots and the body corporate.

A determination of reasonableness within the context of allocating insurance excess depends upon the circumstances at hand.

Who is responsible for paying the difference between the insurance payout for PVC material and the cost of compliant aluminium material? The difference is several thousand per shutter.

Assuming the building is constructed as a building format plan, and provided it is, in fact, a requirement that the aluminium shutters be installed (which is not always the case), then the body corporate would be responsible for the shutters. The by-laws cannot typically change the maintenance requirements or place the requirement on an owner to upgrade.

Who decides which quote to accept for replacing the shutters? The cheapest quote may not be the best choice.

If the insurance is in the name of the body corporate, the decision must be made by the body corporate (rather than the relevant lot owners). In making any decisions, the spending limits of the body corporate should be observed.

Can apartment owners refuse to install aluminium shutters if they cannot afford the cost difference?

No, not if it is a requirement. However, we would expect the body corporate to be responsible in this instance. To confirm, we would need to carry out a more detailed review and provide an advice.

Katya Prideaux
Mahoneys
E: kprideaux@mahoneys.com.au
P: 07 3007 3753

This post appears in Strata News #689.

Question: An owner caused major damage to their garage. The body corporate insurer paid for repairs, and the owner paid the excess. The claim resulted in a substantial insurance increase at renewal time. Insurance did not recover the costs from the driver because the driver was an owner in the building. Is this correct?

An owner within our complex of 36 townhouses misjudged their garage door opening and caused significant structural damage to the cost of around $30,000. The body corporate insurer paid for repairs, and the owner paid the excess.

When the policy fell due for renewal, the premium had increased significantly, and insurance advised the body corporate that the increase was partly due to the claim. We asked the insurer they didn’t recover costs from the owner’s vehicle insurance. They responded that this would not be possible since the owner caused the damage and was effectively a policyholder for the body corporate insurance policy. Had any other third party caused the damage, they would have pursued the driver’s insurance for cost recovery. Can you please advise if this is correct?

The insurance is held by the body corporate. Is this not a separate legal entity from the owner and their vehicle insurer? Could the body corporate insurer recover the repair costs from the owner’s vehicle insurance?

Answer: As the lot owner contributes towards the premium, they are an insured party under the policy.

Yes. If a non-insured third party impacted the strata property, the insurer would have pursued a recovery action against the at fault party to recover the costs.

In this instance, we believe the insurer was correct in advising that they will not pursue a recovery against a lot owner or their vehicle insurance.

As the lot owner contributes towards the premium, they are an insured party under the policy.

Although the strata insurance is in the name of the body corporate, strata policies include specific definitions of “you” that include lot owners and the interest of members of the body corporate.

Insurers are not allowed to lawfully pursue a recovery against someone they insure for a claim they have already paid.

In that essence, it would be the same if you owned a freestanding home, you impacted your garage door, and your home insurer pursued recovery against you for the damage.

While we understand the concern over additional costs associated with a claim, it’s important to consider the implications when buying a property in a strata development. When you choose to own in a strata, you become part of the collective claims history for the complex, which includes claims that may have no direct connection to you. This is a risk that must be considered when deciding to own a property in a strata development.

Tyrone Shandiman
Strata Insurance Solutions
E: tshandiman@iaa.net.au
P: 1300 554 165

This post appears in the August 2023 edition of The QLD Strata Magazine.

Question: A lot owner carrying out unauthorised renovations experienced a leak. Is the owner responsible for the excess? Will insurance investigate the cause of the leak?

Our body corporate has six duplexes / 12 units at ground level. Without approval, one lot owner appears to be renovating the interior of their unit.

The kitchen sink and hot water system have been removed. A leak in an internal wall flooded parts of the unit. The leak may have been due to the renovations.

Is the lot owner responsible for the $5000 excess? Will the insurance company carry out a thorough investigation into the cause of the leak?

Answer: Several factors will determine how the insurer assesses the claim.

Concerning who is responsible for the excess, Queensland legislation states that for claims affecting one lot only, the excess is usually paid for by the lot owner unless the body corporate decides it is unreasonable in all the circumstances for the owner to pay the excess.

Concerning the investigation process, several factors will determine how the insurer assesses the claim. The assessment options are:

Assessor: The insurer may appoint an assessor. However, it is important to note that appointing an assessor is an additional cost to the insurer. Assessors are therefore appointed on a case by case basis. If the insurer does not appoint an assessor, they will review the information and documents provided to them as part of their investigation.

Insurer Appointed Builder: In the absence of appointing an assessor, the insurer can also appoint their own builder to report on the damage and quote to repair.

Desktop Assessment: If the owner submits all of the documentation and information needed (such as reports from builders, photos, quotes etc.), the insurer may also conduct a desktop assessment of the information provided.

If the committee has specific concerns about the claim, they can discuss these concerns with the insurer when they lodge the claim. While the insurer has the right to decide on how they assess the claim, the committee can also ask the insurer to appoint an assessor to investigate any concerns.

Tyrone Shandiman
Strata Insurance Solutions
E: tshandiman@iaa.net.au
P: 1300 554 165

This post appears in the June 2023 edition of The QLD Strata Magazine.

Question: My car got damaged due to a blocked drain caused by debris. Is the body corporate responsible? How do we get our car insurance excess reimbursed?

While my car was parked in a non-reserved space in our apartment complex it got damaged (written off) due to heavy rain overnight. The damage was caused by a drain in front of the car that was blocked by debris.

Is the body corporate liable for the damage to my car? If so, how do I approach the body corporate to get our car insurance excess covered?

Answer: The car owner or their insurers would need to demonstrate the body corporate was negligent or otherwise legally liable in relation to the blockage.

The information provided isn’t sufficient to determine whether the body corporate is liable. Essentially the car owner or their insurers would need to demonstrate the body corporate was negligent or otherwise legally liable in relation to the blockage (i.e. prior knowledge of the blockage or not rectifying a known blockage in a timely manner).

If a demand was made to the body corporate, it can be referred to the insurer of a Legal Liability claim, which is considered on a case-by-case scenario by insurers, solicitors and judges (if the claim ends up in court). Claims are never black and white and legal liability will vary based on the circumstances.

In response to how to approach costs being covered by the body corporate, the car insurer should take into consideration recovery prospects as part of the vehicle claim. The general process is you lodge a claim and pay your excess. Once the settlement is finalised and the total cost of the claim is known, the insurer initiates recovery against the party they view are responsible for the damage. If the insurer deems the body corporate is liable, they would attempt to recover the total cost of the claim from the body corporate. If they are successful in recovering costs, the insurance company will generally reimburse the excess.

Tyrone Shandiman
Strata Insurance Solutions
E: tshandiman@iaa.net.au
P: 1300 554 165

This post appears in the May 2023 edition of The QLD Strata Magazine.

Question: Water entered the unit and damaged the floating floors, caused by improperly maintained body corporate assets. As floating floors are not covered by strata insurance, do I have any way of recovering my costs?

During the February 2022 Brisbane floods, water entered my first-floor lot. It ruined the bamboo floor and caused the paint to bubble and peel on my interior walls.

The apparent cause was improperly sealed exterior roof flashing resulting in inundation in the double brick cavity and subsequent water penetration to my unit through the brick and concrete walls.

The building insurers won’t cover the damage as floating floors are explicitly exempt from the policy.

As the damage to my unit was caused by improperly maintained body corporate assets, do I have a case for recovering my costs via QCAT or another avenue?

Answer: There needs to be strong and clear evidence that the damage was caused by a failure of the body corporate to maintain an item it is responsible for.

This has been a very common issue over the last 12 months. I suspect it will continue to be an issue as insurers are still wading through the insurance claims from the floods last year.

There is absolutely an avenue here for the lot owner. However, there needs to be strong and clear evidence that the damage was caused by a failure of the body corporate to maintain an item it is responsible for – to the correct standard. This is where claims often fall over.

It may also be worthwhile to assess:

If the body corporate had an obligation to ensure the insurance coverage included the floating floors; and

If the insurance policy does actually properly exclude the floating floors.

Todd Garsden
Mahoneys
E: tgarsden@mahoneys.com.au
P: 07 3007 3753

This post appears in the May 2023 edition of The QLD Strata Magazine.

Question: Our insurance excess has increased substantially. Should we adjust our budget to factor in the increase in excess?

Our scheme has been hit this year with an increase in the water damage excess from $1000 to $10,000 for each and every claim. Does this seem reasonable?

If the $10,000 excess is defensible and presumably based on a poor history of claims for water damage, should the committee start factoring in extra payments for water damage repairs in our annual budget?

Answer: The body corporate should pass the excess on to the person responsible rather than budgeting to pay for it.

Yes, the increase in water damage excess is probably going to be reasonable, particularly if the insurance had a lot of previous claims on that policy. We’ve had a couple of disputes in the last few months where there is a high excess, and it’s unfortunate, but that’s the reality. There’s nothing really anyone can do about it.

I don’t think the body corporate should be budgeting for hire excesses. Typically, if there is a water claim excess and it’s due to something that happened in a lot, the body corporate should pass that excess on to the person responsible rather than budget to pay for it.

Todd Garsden
Mahoneys
E: tgarsden@mahoneys.com.au
P: 07 3007 3753

This post appears in Strata News #643.

Question: If body corporate owners actively maintain and manage their buildings, should they have access to better priced strata insurance?

Answer: Body corporate owners who actively maintain and manage their building benefit from not having adverse conditions imposed on their insurance policy.

Insurers typically do not provide discounts for buildings that demonstrate maintenance or risk management. It is implied by insurers that this is an expectation.

Instead, insurers impose higher premiums, excesses or policy conditions on buildings with a poor claims history or that disclose issues and defects.

Body corporates that actively maintain and manage their building benefit from not having adverse conditions imposed on their insurance policy.

Therefore, to ensure penalties are not imposed by insurers, buildings should always take a proactive approach to maintenance and risk management.

Tyrone Shandiman
Strata Insurance Solutions
E: tshandiman@iaa.net.au
P: 1300 554 165

This post appears in the April 2023 edition of The QLD Strata Magazine.

Question: If a lot owner does not maintain known issues in their lot and this causes damage to common property, are they liable?

A lot owner in our building (BFP) is aware they have water traps on their lot. They have leaky covers on rooftop access doors, plus a leaky and poorly constructed pergola on their exclusive use rooftop terrace. These items are not maintained or repaired so that they work properly to prevent water damage. The resultant water damage becomes the cost of all owners to fix. Can the owner be pursued for the cost of the resultant repairs?

Answer: Not only can lot owners face an uninsured loss for damage to their own property, they can also be held liable for damage to other’s property as well.

Lot owners have a responsibility to maintain their lot in good condition. That is a requirement under applicable regulations, for example, section 211(3) of Body Corporate and Community Management (Standard Module) Regulation.

From an insurance perspective, failure to maintain a property can also have an adverse impact on insurability.

Insurers will include exclusions such as Damage caused by non-rectification of an Insured Property defect, error or omission that You were aware of, or should reasonably have been aware of – this will give the insurer the ability to deny a claim for damage resulting from the failure to address these known issues.

Not only can lot owners face an uninsured loss for damage to their own property, they can also be held liable for damage to other’s property as well.

Tyrone Shandiman
Strata Insurance Solutions
E: tshandiman@iaa.net.au
P: 1300 554 165

This post appears in the March 2023 edition of The QLD Strata Magazine.

Question: Our QLD apartment floor was damaged due to a water leak in the drainage pipe behind a dishwasher. The complex is 2 years old and we purchased off the plan. If we wish to claim the damage on insurance, is there a time limit for reporting?

Answer: I would recommend the claim for defective drainage be lodged with the Builder or QBCC as soon as practical.

As the property is only 2 years old, it would still be covered by the Builder and Home Warranty Insurance through QBCC.

I would recommend the claim for defective drainage be lodged with the Builder or QBCC as soon as practical. Please refer to the QBCC website for additional details: Home warranty for defective work claims

If you are looking to claim the flooring damage on strata insurance, a claim should be lodged as soon as the damage is noticed. If the leak is not attended to and allowed to continue causing damage to the property, the strata insurer may decline the claim or limit their liability.

Strata insurance will not cover the cost to rectify the defective drainage pipe.

Tyrone Shandiman
Strata Insurance Solutions
E: tshandiman@iaa.net.au
P: 1300 554 165

This post appears in Strata News #628.

Question: Does the body corporate have a duty to disclose defects reports to their broker/insurer when renewing their insurance cover?

If an owner pays for building investigations following a defects inspection, should the initial Defects Report and any subsequent Reports be made available to the quantity surveyor commissioned to prepare the next Sinking Fund Forecast?

Does the body corporate have a duty to disclose these reports, and the identified risks, to their broker/insurer when renewing their insurance cover?

Answer: If asked why you didn’t disclose, how do you justify that?

I think if it affects common property, it is a body corporate expense and I don’t see why it would not be provided to a QS. As to insurance, disclosure is always better, because if asked why you didn’t disclose, how do you justify / explain that?

Frank Higginson
Hynes Legal
E: frank.higginson@hyneslegal.com.au
P: 07 3193 0500

This post appears in Strata News #628.

Question: My strata unit had internal water damage from a leaking roof following a weather event. I’ve paid for the roof repair but been told the internal damage is my responsibility and I will only be reimbursed up to the amount of the Body Corporate insurer panel builder’s quote. Is this right?

My strata title unit, along with several others in the complex, had internal water damage from leaking roofs following a weather event. I have paid to have the roof repaired. The Body Corporate Insurer panel builder quoted about 8 months ago on the cost to repair the internal damage. I have now been advised by the BC insurer that I will have to pay and organise to have the internal repairs completed myself and they will only reimburse me up to the amount as per the panel builder’s quote. They are now imposing a limit on liability.

Despite my request, they have not provided a copy of their report/quote, plus the cost of any repairs will have increased since their quote. Where do we stand?

Answer: Some insurers are offering a cash settlement for claims and in some instances, this can be a benefit to clients, in other instances is it may not be beneficial to accept a cash settlement.

Insurer panel builders are experiencing significant delays following the Queensland and New South Wales storm/flooding event in 2022 which resulted in $5.2 Billion in insurance claims, with over 233,000 claims lodged. This event was a catastrophe for many people and businesses and is the second most expensive weather event in Australia’s history. The number one event was the Sydney Hailstorm in April 1999.

Issues with supply lines for construction materials has also exacerbated the delays for the construction industry.

In catastrophic events, insurers have limitations on the level of control they have over timeframes for contractors completing work for policy holders.

For this reason, some insurers are offering a cash settlement for claims and in some instances, this can be a benefit to clients, in other instances is it may not be beneficial to accept a cash settlement.

The main benefit in accepting such an offer is you may get the work completed much faster by sourcing a local builder that has availability to start works immediately.

Insurance repairs generally cost more than what you may get privately through a builder as insurers builders include project management costs and other contingencies. If, however, you are not able to find a quote lower than the limit of liability offered by the insurer, particularly given the quote is out of date and does not factor in increases to building costs, you should not accept the settlement offer by the insurer. In such instances, we recommend you request the insurer increase the settlement to factor in the higher cost or if not find a builder to quote and repair the work.

It is important to also understand the insurer does not warrant the repairs of builders they do not engage – any issues with workmanship will be a matter between you and the builder that the insurer does not become involved in. If the repairs required for your claim are complex or have a higher risk of workmanship issues down the track and you want the insurers guarantee of workmanship, you can decline the offer and ask the insurer’s repairer to conduct work.

If however, you are happy to engage your own builder, I would recommend first getting quotes from a builder to see if the settlement offer is fair and reasonable. If the quotes are above the insurers limit of liability, you should decline the settlement and ask the insurer to increase their settlement offer to the costs quoted or request they find an alternate repairer to complete the works.

You also have the right to ask for the quotes and reports associated with your claim and we recommend you refer the insurer to their obligations under the General Insurance Code of Practice which states:

Section 79 If we offer a cash settlement under a home building policy, we will provide you with information to help you understand how they work and how decisions are made on cash settlements.

Section 161 At your request, and subject to paragraph 163, we must give you — free of charge, access to any information that we relied on in assessing your application for insurance cover, or in handling your claim, or in responding to your Complaint. We must give you this information within 30 Calendar Days unless paragraph 82 or 151 applies.

If you are not happy with your claim, you can ask the claim is referred to dispute resolution – more information on this process can be found via our recent Dispute Resolution Webinar link. Likewise, if your policy is managed by an insurance broker, you can discuss your concerns with them and they should be able to provide advice on how to navigate your concerns and any disputes that arise from the claim.

Tyrone Shandiman
Strata Insurance Solutions
E: tshandiman@iaa.net.au
P: 1300 554 165

This post appears in Strata News #620.

Question: Lack of maintenance to a shower caused damaged to a hallway. Is the owner responsible for the repairs to common property? How is the insurance claim handled?

An owner of a unit ignored obvious grout issues in their shower. The shower is on the same wall as the hallway and the skirting in the hallway began to rot and crumble. 3 months ago, the cause of the leak and damage was established as the unsealed shower but the owner still hasn’t carried out any repairs. The skirting damage continues to spread.

After watching this webinar with Tyrone Shandiman I have a few questions: Water Damage Insurance Claims.

Does the body corporate send the bill for the resulting repairs to the common property to the owner? Is it up to the owner to decide if they want to lodge a claim under the building insurance?

Answer: There are 2 options available to the body corporate.

If the body corporate believes the owner is responsible for the damage and does not want to cover costs associated with the owners failure to fix the known issues, there are 2 options available to the body corporate:

Letter of Demand to Owner: If due to the owners failure to maintain their property in good condition, common property has been damaged, the body corporate can send a letter of demand to the owner. The owner will then have the option to lodge a public liability claim on their contents insurance or a strata insurance claim.

Lodge a claim on strata insurance – it should be noted that:
1. The insurer may apply exclusions associated with failure to rectify know building defects, errors or omissions – likewise damage must be from a “sudden and accidental” event.
2. The owner should be liable for the excess.
3. The leak would be required to be fixed (with evidence such as a repair invoice confirming this) before the insurer considers cover for the consequential damage.

Tyrone Shandiman
Strata Insurance Solutions
E: tshandiman@iaa.net.au
P: 1300 554 165

This post appears in the October 2022 edition of The QLD Strata Magazine.

Question: A lot owner reversed their car into common property. The claim for damage was made through the building insurance. Can the Committee pursue the driver for the excess and how?

In 6 industrial units under the Standard Module, each unit has 2 exclusive use car parks. Lot 3 reversed into the front of the building on Lot 42, which is common property. The committee wanted to use the building insurance for the repairs. The driver, who was at fault, wanted to use their vehicle insurance.

The Committee proceeded to process the claim through their building insurance and now the job is complete. The Committee has asked the driver to pay the small excess, but the driver has refused. Can the committee pursue the amount and if so, how?

Answer: Follow the insurer up and confirm the recovery process is underway.

There are a couple of considerations for this issue.

The Body Corporate and Community Management (Standard Module) Regulation 2020 gives guidance on who is liable for an excess for claims that involve lots, but it does not provide guidance on claims that only involve common property – presumably that is because the body corporate is liable.

If an owner wants to lodge a claim on motor insurance (for example because there is a lower excess), this can be facilitated by the body corporate getting the repairs done (or a quote for the repairs) and submitting a letter of demand to the owner to lodge on their motor insurance.

A letter of demand should include:

Opening statement that you are making a demand (i.e. We would like to submit a letter of demand in relation to a recent incident. If you have insurance the we recommend this letter is sent to your insurer to lodge a claim under the public liability section of your insurance policy.)

Circumstances of the event (include date & description of damage);

Why you believe the driver is responsible;

Summary of costs and a request for reimbursement (include invoices or quotes for repairs with your demand);

Bank details for reimbursement.

As the claim has already been lodged (and possibly settled), the strata insurer is likely to submit their own letter of demand to the driver and in the event they successfully recover all costs, the body corporate will be refunded the excess.

It is therefore our recommendation in this instance the body corporate follow the insurer up and confirm the recovery process is underway. Not only with they recover the body corporate excess but also costs associated with the claim.

Tyrone Shandiman
Strata Insurance Solutions
E: tshandiman@iaa.net.au
P: 1300 554 165

This post appears in the September 2022 edition of The QLD Strata Magazine.

Question: Can an owner make a claim directly to the body corporate insurer without the body corporate inspect the damage and determine responsibility?

Can an owner make a claim directly to the body corporate insurer without the body corporate having inspected the damage?

An owner has spoken with the insurance company and is getting quotes for damage to tiles and ceiling due to water ingress. However, the committee has not had the opportunity to inspect the damage and determine responsibility.

The proposed damage is from water damage more than ten years ago and is being raised now with a current insurance claim the committee has with the insurance company due to a recent rain event. In total. three units are impacted by the current claim including the owner mentioned above.

Answer: If the committee have concerns about the damage being claimed, they can make representations to the insurer about their concerns.

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

Notwithstanding, if the committee have concerns about the damage being claimed, they can make representations to the insurer about their concerns and asking that an assessor is appointed to the claim to assess the damage claimed.

It is unusual for a committee to inspect a unit. Usually, the owner provides evidence of damage or insurers will appoint an assessor to do the inspection.

In cases where three units are damaged, the damage should all be submitted to the one claim so the body corporate should ask that the other units are added to the claim so that one excess applies.

Tyrone Shandiman
Strata Insurance Solutions
E: tshandiman@iaa.net.au
P: 1300 554 165

This post appears in Strata News #593.

Question: An overflow sewerage pipe caused damage to carpets. Body corporate insurance removed all carpets, but say they are not responsible for the replacement. Is this really a lot owner’s responsibility?

A sewerage pipe blocked and caused backflow into my apartment and the apartment next door.

Insurance for body corp removed all carpet and underlay from both units and we are now left with bare concrete.

The body corporate’s insurance company states they are not liable to replace any of the carpet. Are they required to at least replace the damaged carpet or is this really a lot owner responsibility?

Answer: Carpet is deemed to be temporary flooring and is therefore the owner’s responsibility to insure under contents insurance.

In this instance there should be a claim on strata insurance (for building damage) and contents/landlords insurance (for damage not considered building).

Carpet is deemed to be temporary flooring and is therefore the owner’s responsibility to insure under contents insurance.

If the owner has a contents insurance policy, they should make a claim under that policy. If not, they will be responsible for the repairs for damage to the carpet.

Tyrone Shandiman
Strata Insurance Solutions
E: tshandiman@iaa.net.au
P: 1300 554 165

This post appears in the July 2022 edition of The QLD Strata Magazine.

Question: The gardener handyman does not carry any insurance. Is he covered under the Body Corporate insurance?

Answer: We recommend the body corporate engage contractors who carry appropriate insurance.

The strata policy extends to cover the body corporate for legal liability claims made for personal injury and property damage.

While this can extend to cover liability the body corporate are drawn into as a result of the gardener’s action, it does not cover claims or legal actions made against the gardener.

In this instance, the gardener would need to carry public liability insurance.

While there is nothing specifically requiring the gardener to have liability insurance in Body Corporate Management Act, the Body Corporate should consider:

If someone was seriously injured as a result of the gardener and was not able to pursue their insurance they could be left in a problematic circumstance without the proper ability to recover financial losses from the gardener;

Solicitors for an injured party will more actively pursue defendants who can pay a claim (i.e. insured defendants) vs those who cannot. If there was an injury where the body corporate & gardener were drawn into the claim and the gardener was not insured, a solicitor may pursue the body corporate more actively having an adverse impact on the body corporate claims history.

For the reasons stated above, we recommend the body corporate engage contractors who carry appropriate insurance.

Tyrone Shandiman
Strata Insurance Solutions
E: tshandiman@iaa.net.au
P: 1300 554 165

This post appears in the June 2022 edition of The QLD Strata Magazine.

Question: Who is liable if a fire sprinkler is faulty and it is activated in an apartment causing water damage to a lot owner’s property?

Answer: Ultimately, the party liable for the damage caused to the lot is the party that is responsible for the maintenance of the faulty sprinkler.

Todd Garsden, Mahoneys:

Ultimately, the party liable for the damage caused to the lot is the party that is responsible for the maintenance of the faulty sprinkler. If any related party has an insurance policy to reduce that liability, then that is a benefit. All utility infrastructure that forms part of scheme land is, by default, common property (and the maintenance obligation of the body corporate) unless it solely relates to supplying services to the lot and is within the boundaries of the lot.

Adjudicators have held that fire related infrastructure which only relates to one lot can actually service the entire scheme if it links back to a building wide notification system – making the body corporate responsible for its maintenance.

Accordingly, it is important to ascertain what part of the sprinkler system was faulty. Is it:

a part that only services the lot (in which case the lot owner would be responsible); or

a part that connects back to a building wide system (in which case the body corporate would be responsible).

Tyrone Shandiman, Strata Insurance Solutions:

In this instance, it is recommended an insurance claim is made on both the strata policy and the lot owner’s contents or landlords insurance.

From a strata insurance perspective, insurers cover the cost to repair water damage to insured property but generally exclude repairs costs related to finding and fixing the leak, as it is generally considered a maintenance responsibility failure by the owner or body corporate and such repairs relate to general maintenance, defects or wear and tear.

As the strata insurance policy does not cover damage to contents items including carpets, curtains/blinds, appliances and other contents items, we recommend a claim is made on the lot owners’ landlords or contents insurance.

If the insurer believes the body corporate is responsible for the damage, they can take recovery action against the body corporate and in such instances, the contents insurer may repay the excess subject to the policy terms and conditions.

In such instances where a claim is made against the body corporate for legal liability for damage to lot owner’s contents a claim can be made on the Legal Liability or Public Liability section of the strata policy.

Todd Garsden
Mahoneys
E: tgarsden@mahoneys.com.au
P: 07 3007 3753

Tyrone Shandiman
Strata Insurance Solutions
E: tshandiman@iaa.net.au
P: 07 3899 5129

This post appears in the April 2021 edition of The QLD Strata Magazine.

Question: Our Strata insurance covers the building, however I’m responsible to maintain my exterior walls, windows and doors. If this is the case, can I reduce my contribution to the BC insurance?

I live in a townhouse complex that is a Standard Format Plan. As part of my levies, I pay an annual insurance levy which is supposed to cover the building, including external windows and doors. However under a Standard Format Plan, I am the one responsible for the maintenance of both the inside and outside of the building, including exterior walls, windows, doors and even foundations.

Does this mean that if my unit building is damaged or destroyed, I am liable for its reconstruction, not the body corporate? If this is the case, can I get a reduction of the Body corporate insurance by only paying for common property cover and then pay my own home (and contents) insurance?

Answer: It is important to understand the difference between “responsibility to insure” and “responsibility to maintain”.

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

For strata buildings, the body corporate can be responsible for insuring property that a lot owner is responsible to maintain.

If that property is damaged, then the first consideration is insurance (which is maintained by the body corporate).

If the damage is not claimable (for example the claim is below excess or excluded under the policy) the lot owner then becomes responsible for the cost of that maintenance.

Tyrone Shandiman
Strata Insurance Solutions
E: tshandiman@iaa.net.au
P: 07 3899 5129

This post appears in Strata News #544.

Question: We are trying to figure out if the roof on our building is covered under our building insurance policy.

I am trying to confirm if the “roof” of a strata building is included as part of our Insurance policy which states the definition of “Insured Property” as:

Building: Building means building or buildings as defined by the Strata Schemes Management Act, Strata Titles Act, Community Titles Act or similar legislation applying where Your Building is situated.

Can you confirming if “roof” is defined as being part of a building?

Answer: The roof, being a permanent fixture, is covered by strata insurance.

There are two questions that need to be considered when dealing with roof damage.

Is the roof covered?

The roof, being a permanent fixture, is covered by strata insurance.

The basic principle is that if you pick the unit up and shake it anything that falls out is lot owners contents + temporary flooring such as carpet, blinds & curtains, appliances that are not permanently attached, aircon units servicing an individual lot (QLD only). Other permanent fixtures including but not limited to the roof are covered by strata insurance subject to the policy terms, conditions & exclusions.

Is the event/damage covered?

It is also important to consider whether the event itself is covered.

Often, claims related to roof repairs are maintenance issues and the two barriers to cover are:

The insuring clause – the policy provides cover for “sudden and accidental damage”; and

Exclusions – Common exclusions for roofing claims are wear & tear or gradual deterioration exclusion.

Damage to roofs by sudden events such as storm, hail & severe wind can be considered.

Tyrone Shandiman
Strata Insurance Solutions
E: tshandiman@iaa.net.au
P: 07 3899 5129

This post appears in the December 2021 edition of The QLD Strata Magazine.

Question: What insurance claims can be made when a pressure value fails resulting in damage to carpet, gyprock and kitchen cupboards? The pipes service a number of units in a high rise building?

In The NSW Strata Magazine | September 2021, Tyrone Shandiman stated that “Where there is damage to both buildings & contents, a claim MUST (my emphasis) be made on both the contents and the strata policy”. I note his answer was to a question related to a burst pipe from a washing machine. Would the answer be different were there damage to carpet, furniture, gyprock and kitchen cupboards caused by a pressure valve failure (after some 30 years) in pipes that service a number of units in a high rise building ie the pipes and valve are common property?

Is the position the same In Qld?

Answer: The basic principal is that you must claim on the policy that insures the property damaged.

The basic principal is that you must claim on the policy that insures the property damaged. In this case, damage to carpet and furniture would be contents insurance and damage to gyprock and kitchen cupboards would be strata insurance.

With regard to cover subject to assessment by the insurer and applying the policy terms and conditions, the policy holder could expect that the insurer would cover water (“sudden & accidental damage”) but exclude repair costs associated with finding and fixing the damaged pressure valve (“wear & tear”).

The treatment of claims is consistent across all states in Australia.

Tyrone Shandiman
Strata Insurance Solutions
E: tshandiman@iaa.net.au
P: 07 3899 5129

This post appears in Strata News #512.

Question: How much do historical claims impact the upcoming year’s strata insurance premium? Is there a ratio?

Answer: Claims history does impact the insurance premium.

Claims history is a major rating factor considered by insurers and therefore it does impact the insurance premium. Guidelines around claims history will differ from insurer to insurer.

In our discussions with insurers, we are advised they are targeting clients with “running losses” for everyday claims such as water damage, glass & impact damage claims of less than 30% of the insurers base premium (excluding GST, Stamp Duty, Fees).

In addition to paying for claims associated with “running losses” the remaining premium is used by the insurer to cover operating costs (such as wages, rent etc) and re-insurance which insurers purchase on global insurance markets to cover low frequency/high cost claims that might happen say every 25, 50 or 100 years including one off large losses (claims over say $500,000) & catastrophe events (such as storm’s, earthquake, tsunami etc). When “running losses” exceed 30%, due to operating & re-insurance costs the insurer must provision for, a policy starts to run at a loss for the insurer.

Insurers are also looking at the type of claim – for example, water damage claims are less favourable for some insurers. A series of water damage claims can be a lead indicator that pipes, membranes, roofs and other water apparatus are starting to fail due to either coming to the end of their use life or they were not installed correctly when the property was built.

To avoid your claims history impacting your insurance premiums, it is recommended that regular preventative maintenance is conducted.

Tyrone Shandiman
Strata Insurance Solutions
E: tshandiman@iaa.net.au
P: 07 3899 5129

This post appears in the August 2021 edition of The QLD Strata Magazine.

Question: Is it possible to insure a Retaining wall? I have tried to insure the retaining wall with my home and contents insurance but the insurance company will not commit.

Is it possible to insure a Retaining wall? We have just spent $180,000 replacing a retaining wall on our complex of 10 strata units, amounting to $18,000 from each unit. Now we have an issue with a retaining wall on the opposite side and the chairperson is saying “it is on your land you pay for it”. I cannot work out why one side is different to the other. All walled areas in our scheme are on common property with exclusive rights.

I have tried to insure the retaining wall with my home and contents insurance but the insurance company will not commit. Retaining walls seem to be a very grey area and no one wants to commit.

Answer: You cannot insure items defined as “building” under a policy other than the strata policy, due to the basic principal that you can’t insure part of a building.

I think it is important to understand the difference between “responsibility to insure” and “responsibility to maintain” the retaining wall. It is my view this is where the misunderstanding may be.

As the retaining wall is a permanent fixture, a strata policy defines the retaining wall as “building” under the strata insurance policy. As you cannot insure items defined as “building” under a policy other than the strata policy, due to the basic principal that you can’t insure part of a building, The Body Corporate Management Act requires the body corporate to insure permanent fixtures including those inside a lot under the strata insurance policy. It is an accepted practice in strata that the body corporate has responsibility to insure permanent fixtures.

For events that fall outside of an insurance claim, a lot owner has responsibility to maintain property that forms part of their lot. In the case of a retaining wall, strata policies will cover sudden and accidental damage that can be the first barrier to making a claim. Furthermore, exclusions can apply including storm or rainwater to retaining walls, gradual deterioration, gradually operating causes, earth movement, erosion, invasion of tree or plant roots, normal settling, creeping, heaving, seepage, shrinkage, or expansion in buildings, foundations, footings and other structural improvements.

Outside of maintenance matters that are not covered by insurance, it falls to the owner of the property to maintain that property. With regard to whether the retaining wall forms part of common property and is the body corporate responsibility to maintain or whether the retaining wall forms part of the lot and is the lot owners responsibility to maintain, that question fits the professional remit of a strata manager. Notwithstanding, strata plans should provide clarity on this question.

Tyrone Shandiman
Strata Insurance Solutions
E: tshandiman@iaa.net.au
P: 07 3899 5129

This post appears in the July 2021 edition of The QLD Strata Magazine.

Question: I am a new owner in a strata building. How do I find out what is common property and covered by the body corporate insurance? How about changes to my lot that have been made over time. Is there a record of these and what is covered by the insurer?

Answer: The basic principle is that if you pick the unit up and shake it anything that falls out is the lot owners contents

William Marquand:

To check the coverage of your insurance contact your body corporate manager and ask for a copy of the certificate of currency and policy disclosure statement for the insurance for your scheme. If you have a specific question your manager can refer it to the scheme’s insurance broker and they may be able to provide an answer.

Generally, the extent of your insurance coverage will be determined by whether your scheme is a standard format or building format plan. The government website has a detailed explanation of what should be covered and is worth reviewing: Queensland Government: Insurances in a body corporate

As per that website the body corporate must have insurance for:

common property

body corporate assets

public risk

every building which contains a lot.

It is possible that your insurance coverage will be more extensive than that, but you will need to make sure you understand what is and isn’t common property.

The website also provides a definition of what is a building, stating:

A ‘building’ includes any improvements made to the building and fixtures added to the building. It does not include:

temporary wall, floor and ceiling coverings, carpets

fixtures that can be removed by a lessee or tenant at the end of a lease or tenancy

mobile or fixed air conditioning units for a particular lot

curtains, blinds or other internal window coverings

mobile dishwashers, clothes dryers or other electrical or gas appliances that are not wired or plumbed in.

So, in most cases, your contents are not covered.

The question asks how you know about changes to the lot. Ideally, all changes should have been recorded as having been approved by either a committee or general motion and you should be able to check the body corporate records for these. In practice that may not have happened. However, from an insurance perspective the body corporate is responsible for insurance items defined by legislation as “building” (i.e. permanent fixtures) including property inside the boundary of a lot.

Tyrone Shandiman:

The basic principle is that if you pick the unit up and shake it anything that falls out is the lot owners contents + temporary flooring such as carpet, blinds & curtains, appliances that are not permanently attached, aircon units servicing an individual lot (QLD only).

Other permanent fixtures including but not limited to kitchen & bathroom cabinetry are covered by strata insurance subject to the policy terms, conditions & exclusions.

Lot owners should also have contents/landlords insurance to cover property not insured by the strata policy & liability within the lot and I always suggest lot owners add an extra say $10,000 contents cover on what they believe should be covered for any incidental items not considered as it might only cost say $50 for the extra piece of mind.

Renovations that fall within the definition of the insurers policy wording for “building” (i.e. permanent fixtures) will form part of the strata insurance.

Most policies will have a provision for “lot owners fixtures & fittings” which is designed to cover instances where lot owners replace existing or install additional fixtures and fittings in their lot/unit without the Body Corporate being aware of such improvements. As a consequence, the cost of these improvements may not be included when arriving at the building replacement cost, thus increasing the possibility of underinsurance in the event of a major loss. The automatic cover provided by the insurer allows for extra re-build costs in addition to the building sum insured if a lot owner has upgraded their property without the body corporate knowing or factoring this into the building sum insured.

Insurers do not keep a record of alterations lots.

William Marquand
Tower Body Corporate
E: willmarquand@towerbodycorporate.com.au
P: 07 5609 4924

Tyrone Shandiman
Strata Insurance Solutions
E: tshandiman@iaa.net.au
P: 07 3899 5129

This post appears in the June 2021 edition of The QLD Strata Magazine.

Question: The committee is aware of asbestos in the fire doors but do not wish to disclose this to the broker or the insurer. They’ve engaged an insurer directly. What should the Body Corporate Managers do in this scenario in terms of due diligence and compliance?

Answer: Does the insurer ask about whether there’s any asbestos in the building?

Firstly, does the insurer ask about whether there’s any asbestos in the building? So obviously, if they do, there’s a definite requirement to answer correctly on that. The other thing that you need to look at with asbestos is that I know there are policies in the market that have exclusions around asbestos. The third thing is, do you have a duty to disclose this information as a matter that’s relevant to the insurer’s decision to ensure you? If that’s questionable, I probably would suggest that you err on the side of caution.

From the Body Corporate Managers perspective, I would probably say to the committee ‘Look, this could be a matter that you need to disclose to the insurer. Your failure to do that could mean the insurer voids the policy at the time of a claim’, and I guess put it back on the body corporate that they should consider this in not disclosing.

If you’ve done that as a Body Corporate Manager, you’ve really fulfilled your duty to the client. The better thing to do would be just to refer it to the broker and have them deal with that issue and forward the advice from the broker to the committee.

Tyrone Shandiman
Strata Insurance Solutions
E: tshandiman@iaa.net.au
P: 07 3899 5129

This post appears in the May 2021 edition of The QLD Strata Magazine.

Question: I own an investment unit in a strata building and I have landlord insurance. What is covered under my landlord insurance and what is covered under my strata insurance?

Answer: If you were to pick the unit up and shake it, anything that falls out is lot owner’s contents

The basic principle is that if you were to pick the unit up and shake it, anything that falls out is lot owner’s contents + temporary flooring such as carpet, blinds & curtains, appliances that are not permanently attached and aircon units servicing an individual lot (QLD only).

Other permanent fixtures including but not limited to kitchen & bathroom cabinetry are covered by strata insurance.

Tyrone Shandiman
Strata Insurance Solutions
E: tshandiman@iaa.net.au
P: 07 3899 5129

This post appears in the April 2021 edition of The QLD Strata Magazine.

Question: Are the compressor units on the roof and the header units inside the apartment, together comprising my air conditioning unit, covered under Strata insurance or my personal contents insurance?

Our 75 apartment complex has Strata Insurance which mentions cover for motors burnt out by Fusion. I also have contents insurance. Are the compressor units on the roof and the header units inside the apartment, together comprising my air conditioning unit, covered under Strata insurance or my personal contents insurance?

Answer: In Queensland, Airconditioning units that service an individual lot are the lot owners responsibility.

In Queensland, Airconditioning units that service an individual lot are the lot owners responsibility to insure under contents insurance.

So if you have a contents insurer you should make contact with them first. They may need a decline letter from your strata insurer before a claim can be considered.

Tyrone Shandiman
Strata Insurance Solutions
E: tshandiman@iaa.net.au
P: 07 3899 5129

This post appears in the April 2021 edition of The QLD Strata Magazine.

In Queensland, is Your Air conditioning Unit Covered By Strata Insurance?

Queensland lot owners of strata properties need to be mindful that air-conditioning units, whether fixed or not, are not covered by strata insurance.

The Body Corporate and Community Management (Standard Module) Regulation 2008 implicitly states that Air-conditioning units servicing an individual lot are the not part of the definition of building for insurance purposes:

.. building includes improvements and fixtures (but not including carpet) forming part of the building, but does not include —

(c) mobile or fixed air conditioning units servicing a particular lot;

Insurers will generally provide cover in accordance with applicable strata legislation and subsequently, strata insurers will seek to apply an exclusion that reflects the legislation.

Other states in Australia do not have such exclusions in their strata legislation for Airconditioning units and therefore, insurers only seek to exclude Airconditioning units in Queensland in their insurance policy.

It is not unusual for individual states to exclude cover for items a reasonable person might deem to be part of the building, for example in New South Wales and Australian Capital Territory strata legislation excludes cover for paint and wallpaper.

To avoid any gaps in cover we recommend all owners of lots in strata take out contents or landlords insurance which is intended to cover anything that is not covered by strata insurance.

Tyrone Shandiman
Strata Insurance Solutions
E: tshandiman@iaa.net.au
P: 07 3899 5129

This post appears in Strata News #292.

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Comments

Frank says

April 23, 2024 at 8:53 am

How should the cost of Body Corporate building insurance be apportioned among owners? In SFP model, each owner currently pays according to their entitlement share. However, a new approach proposes that payments be based on each owner’s lot floor plan size, given that building insurance primarily covers the individual lot itself. Is it advisable and common practice to base building insurance payments on floor size, or is this method generally not recommended?

Reply
- William Marquand says
  
  May 14, 2024 at 1:53 pm
  
  Monies owed by each lot are determined by the share of entitlements allocated as per the record in the CMS. Sometimes there are separate entitlements for insurance. This is the only means by which you could administer the totals each lot owns. As such I’m a bit confused about your comment on a new approach. Are you suggesting that the levy schedule for the entire scheme be recalculated? This does happen sometimes but not usually in the way you seem to be suggesting as it is unlikely a motion to propose such a change would pass given that it would probably be to the detriment of some owners. There is probably more behind your question than meets the eye but if this is something your scheme is considering I would suggest a review with a body corporate solicitor to advise on the practicalities and possibilities for the proposal.
  
  Reply
Illia says

December 21, 2023 at 12:08 pm

Also, is temporary accommodation provided by the body corporate insurance for the period during repairs?

Reply
- Tyrone Shandiman says
  
  January 31, 2024 at 1:00 pm
  
  HI Illia – Temporary and floating floors are usually the responsibility of the lot owner to claim under contents insurance. Notwithstanding some insurers offer a “floating floors” benefit where they will cover them. I would check with your insurer on this specific issue and if they do not provide cover then refer the matter to the contents/landlords insurer. The policy that covers the flooring will be the policy that responds to the accommodation costs as well.
  
  Reply
  - Tyrone Shandiman says
    
    February 1, 2024 at 6:26 am
    
    Further to my response, if the body corporate are liable for the damages, you can submit a letter of demand to the body corporate which may result in the public liability section of the policy responding. You may point to the body corporate responsibility to maintain their property in good condition that applies in legislation across Australia.
    
    Reply
Helen says

December 4, 2023 at 6:50 pm

Insurance premium in the community title scheme (Building format) consists: of sums: of $ Premium,
$ U’writer Levy, $ GST, $Stamp Duty, and $ Broker Fee. The BC pays total SUM of premium.

How does the BC calculate contribution to be levied when there are $ U’writer Levy, $ GST, $Stamp Duty, and $ Broker Fee as well in a total sum of premium?

The AGM is in May every year, but renewal of insurance is in November, so a new premium can not be known. before the AGM. Would be contribution calculated as estimated and next year the contribution will increase or decrease for a difference between previously calculated contribution and premium already paid for renewal of policy?

Reply
- William Marquand says
  
  February 1, 2024 at 8:45 am
  
  If you have a separate levy calculation for your insurance contribution this will be calculated by taking the total of the amount paid for insurance and dividing between owners by unit entitlements. The breakdown of the insurance costs then informs you of how the premium is calculated but it is only the total that affects the amount you pay.
  
  How the amount of the insurance levy is determined may vary from scheme to scheme. Many will use the known figures but as you indicate if the timing of the AGM and the renewal are quite far apart this could cause a problem if there is a significant variance in the next premium. Some schemes may budget ahead to help accommodate this.
  
  Reply
Brian Cameron says

July 16, 2023 at 12:43 pm

Is a sinking tiled shower base, where there is now insufficient fall to the floor waste, causing water to pool against the back wall, covered by strata insurance.

Reply
- Nikki Jovicic says
  
  July 26, 2023 at 11:37 am
  
  Hi Brian
  
  We will get back to you with more information, however, in the meantime, we strongly suggest you watch this video: NAT WEBINAR: Water Damage Insurance Claims + Q&A Webinar
  
  Reply
- Tyrone Shandiman says
  
  August 10, 2023 at 6:26 pm
  
  Hi Brian
  
  Strata insurance is designed to cover sudden and accidental damage.
  
  There are also exclusions for defects.
  
  Given these two points it is my view there are low prospects of a successful claim against the strata insurance policy.
  
  Tyrone Shandiman
  Strata Insurance Solutions
  
  Reply
Anna says

May 24, 2023 at 9:25 am

We have sustained water damage as a result of burst water under kitchen sink. A claim has been lodged and approved by the Body Corps Insurer. Restoration of our home was approved and documents sent to us to sign, return and pay the excess to the restorer chosen by the Insurer. The Insurer appointed two companies to provide quotations.

We were happy to proceed, however, the Committee for our body corporate have notified the Broker that no repairs are to commence as the committee wish to appoint another company to come to our home to inspect the damages and review the insurance policy.

The Broker has informed that they must take instruction from the committee and not myselft as a lot owner.

I was of the understanding that as a lot owner we are an interested party of the insurance policy and that also as a lot owner we are a party to the contract with the Insurer.

Does the committee have the right to stop the repairs from commencing as approved by the insurer.

Can you please help with some advise.

Reply
- Liza Admin says
  
  June 27, 2023 at 3:30 pm
  
  Hi Anna
  
  Thank you for your comment.
  
  Unfortunately, this situation is too specific to be addressed via this forum.
  
  Reply
GLEN DITRICH says

October 10, 2022 at 6:39 pm

Ok so we have a rather large issue and the Strata managers are not taking responsibility. The problem is that the waterproofing has failed in our Townhouse in Loganlea QLD. The tiles have cracked in 2 bathrooms due to sinking of the floor and possible rotting of the beams in the ceiling. The strata management are saying they are not responsible for any of it other than the ceiling of the ground floor. Apparantly there has been a few untis that have suffered the same issue so is a known issue but unfortunatley the other owners fixed and sold.

Please let me know where we stand as we feel as if we are not being told the whole truth.

Reply
- Todd Garsden - Mahoneys says
  
  March 14, 2023 at 11:37 am
  
  Hi Glen
  
  There is an important distinction to be made here. The strata manager is not ever going to be responsible for maintenance of a building. The strata manager is contracted to provide administrative and secretarial duties – not to maintain the building or keep it free from defects.
  
  The responsibility for a failure of waterproofing is going to depend on a number of things – including whether your lot is created in a building format plan or standard format plan, if the membrane is in a roofing structure, if any damage was caused to the membrane or if there is a builder who is liable for any defects.
  
  I would suggest your best step would be to engage a builder to provide a report on the cause of the damage. A lawyer can then provide you with advice on who would be responsible for repairing the damage and cause.
  
  Reply
Helen says

September 16, 2022 at 5:59 pm

When owners and tenants wash their car on the car park, the cable of their vacuum cleaner leads overs the car park, the hose as well and the pathway, when some of them wash tyres on the pathway that stays wet, how can other owners or tenant manage these situations, when the committee leaves people to do what they want? There are also tenants, who water plants and the footpaths stay wet., there is no approved any voluntary work. Who will be responsible for any injury on the common property, because the BC has statutory obligation to maintain the common property.

Any help would be appreciated.

Reply
- Dakota Panetta says
  
  October 3, 2022 at 10:11 am
  
  Hi Helen,
  
  This can be a tricky one. Many surfaces are treated with non-slip coatings or additives to assist in slip resistance when wet and may be the case within your scheme (parking areas, pathways etc).
  
  In regards to the vacuum lead being a trip hazard, this is difficult to assess unless at the time of an inspection it is in use but in an ideal world, no loose leads should be left across a path of travel.
  
  If however you believe the surfaces are dangerously slippery when wet, the owners may vote to have an independent slip test conducted (usually termed a pendulum slip test) to determine the resistance of the surface when wet.
  
  If shown to be dangerous, the owners may wish to look at installing drainage options to ensure adequate water management directing water safely out of the building.
  
  We have seen many Bodies Corporate create a dedicated carwash bay in the carpark equipped with nice, suitable box drains around it to capture all water run off, soap etc. It also solves the issue of the vacuum lead crossing common paths of travel and being a tripping hazard. This is always a recommended endeavour and adds to the service offering a BC has for its residents and potential new owners.
  
  To answer your query on responsibility after an injury, in most (not all) instances, the body corporate will have a claim made against it for the liability. Personal injury claims can be very costly to a BC and we have seen many result in hundreds of thousands of dollars in compensation.
  
  It is this reason why we recommend an annual safety audit to try and prevent many of these incidents occurring or at least limit the BCs liability by taking some reasonable measures to minimise injury (e.g. signage, designated bays etc).
  
  Reply
Ross Anderson says

April 8, 2022 at 7:07 am

Re article by Todd Garsden(Mahoneys) and Tyrone Shandiman(Strata Insurance Solutions),and Todd’s point that… “Adjudicators have held that fire related infrastructure which only relates to one lot can actually service the entire scheme if it links back to a building wide notification system – making the body corporate responsible for its maintenance.” This distinction hilights the difficulties experienced by mug amateurs like me when trying to understand our strata law in Queensland.
I often advise colleagues to ‘First…read the instructions’ ie read the legislation. Good point, but you cannot stop there; and if you do, you may get a completely inadequate understanding of what those instructions mean, and don’t mean.
For example, the legislation about utility infrastructure and that part of it which services only one unit and is situated within the boundary structures (and therefore is the owner’s responsibility) does not go on to add that it remains a BC responsibility if it connects back to a building-wide system. To know this distinction requires awareness of the relevant Adjudications, and there is nothing in the legn to even alert you to the possibility of this distinction… so why would you go looking for it in austlii in the first place.
No wonder we have so much angst and frustration in our strata world arising from ignorance of the law.

Reply
Robert says

March 17, 2022 at 5:53 am

Hello. Our tenanted unit is in QLD. The supplied washing machine, valve failed and resulted in a leak that caused damage to the units ceiling below. Our landlord insurance policy was denied. Two appeals were also denied. Strata manager advised building insurance excess for water damage is $5000. Initial quotes were just under $5000. However this included repairs to damaged ceiling, from a fire that had previously occurred, this information was initially hidden from us. The “new” quote to pay to repair water damaged ceiling is just under $2000. We are being pressured into paying it. Who is responsible to pay this, please? Kind Regards Robert

Reply
- Liza Admin says
  
  March 25, 2022 at 7:34 am
  
  Hi Robert
  
  The following response has been provided by Tyrone Shandiman, Strata Insurance Solutions:
  
  The owner of the washing machine may be found legally liable for damage to the ceiling of the lot below, whether that be the tenant or the lot owner.
  
  If the owner has landlords insurance (or contents insurance for tenants), there will be a section under that policy for Legal/Public Liability. While the strata insurance policy may have a $5,000 excess, it is unlikely the landlords insurance will have the same excess applying.
  
  In this case we would recommend submitting the demand for compensation to your landlords/contents insurer – make sure you specifically ask them to lodge the claim under the legal/public liability section. In the question, they advise the claim was denied, this may be because the claim is under the property section when it should be under the liability section.
  
  The insurer will then review the demand and determine whether they believe the owner of the washing machine is liable. If they believe they are, they will make a settlement to the lot owner with the damaged ceiling or alternatively they will deny liability in circumstances where they do not believe the machine owner is liable.
  
  If there is no landlords/contents insurance the owner/tenant will be responsible for dealing with the demand by the lot with the damaged ceiling.
  
  I am happy to take further questions offline and assist with the claims process.
  
  Tyrone Shandiman
  Strata Insurance Solutions
  W: https://www.stratainsurancesolutions.com.au/
  E: tshandiman@iaa.net.au
  P: 07 3899 5129
  
  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 and the specific coverage afforded under their policy wording. Shandit Pty Ltd T/As Strata Insurance Solutions is a Corporate Authorised Representative (No. 404246) of Insurance Advisernet Australia AFSL No 240549, ABN 15 003 886 687.
  
  Reply
Helen says

March 3, 2022 at 4:54 pm

Hi, I am confused. Does the BC need Work place Health safety Insurance for its contractors or for volunteers who are some owners or tenants?
Thank you.

Reply
Ianthe says

December 29, 2020 at 11:23 am

I accidentally broke my shower screen and my Strata Manager said that Strata will provide a replacement screen, it was beyond fixing and so old. I was going to have my bathroom renovated in a year so we agreed to replace the screen then. Strata paid on average $500 and this came from the funds, not through our insurance company. Our new Strata Manager has decided this is illegal and will not accept my request for a replacement screen, despite having no formal insurance policies in place with her company, our Insurer and the COO.

She is also not allowing me to have my walls fixed after they were water damaged by my own bathrooms unsealed tiles. Our Strata Manager back then said I have to pay to for the waterproofing, tiling and all of that expense, however, internal hallway water damage Strata will pay for. One insurer called it resultant damage.

My concern beyond my own self is why this new Strata Manager wants to include our Insurance Excess Policy in our By-laws. I haven’t seen that before!

Regards
Ianthe

Reply
- Tyrone Shandiman says
  
  December 31, 2020 at 8:48 am
  
  The strata corporation can not pay for repairs and maintenance to property inside your lot unless you can demonstrate a legal responsibility – for example there is damage to your property due to negligence from the strata corporation. Repairs to your lot is your responsibility.
  
  The requirement for the strata corporation is to arrange insurance, however a broken shower screen for the value of $500 may fall below the policy excess, in which case the lot owner is responsible for the costs.
  
  In relation to the water damage claim, we recommend you request the matter is referred to the insurer for a formal response on the claim. Any matters not covered by insurance that are inside your lot are your responsibility to maintain.
  
  Tyrone Shandiman
  Strata Insurance Solutions
  http://www.stratainsurancesolutions.com.au
  07 3899 5129
  tshandiman@iaa.net.au
  
  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 and the specific coverage afforded under their policy wording. Shandit Pty Ltd T/As Strata Insurance Solutions is a Corporate Authorised Representative (No. 404246) of Insurance Advisernet Australia AFSL No 240549, ABN 15 003 886 687.
  
  Reply
Tyrone Shandiman, Strata Insurance Solutions says

October 16, 2019 at 9:05 am

Hi Richard – Is that in Queensland? None-the-less they are covered as part of owners contents insurance.

Reply
Richard Bright says

October 16, 2019 at 7:50 am

Shop around, there is at least one insurer (they do not deal with brokers) who covers individual apartment air conditioners

Reply

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Question: The hot water system in my apartment’s kitchen cupboard ruptured, damaging the cupboards. Neither landlord insurance nor strata insurance says they cover the kitchen. What do I do now?

Answer: Permanent fixtures such as built in cabinetry are considered part of the building and only insurable under a strata policy.

Question: Heavy rain resulted in moisture coming through the tiled roof of our top-floor unit, saturating the insulation and collapsing the roof. Our strata manager says we should lodge the claim with our contents insurer. Isn’t this covered by strata insurance?

Answer: Ask your strata manager for confirmation.

Question: The original shutters on our building were PVC. By-laws now require aluminium shutters to be installed. A storm damaged some original PVC shutters. Strata insurance will only replace like for like, so who pays for the upgrade to aluminium shutters?

Answer: The by-laws cannot typically change the maintenance requirements or place the requirement on an owner to upgrade.

Who is responsible for the excess from an insurance claim?

Who is responsible for paying the difference between the insurance payout for PVC material and the cost of compliant aluminium material? The difference is several thousand per shutter.

Who decides which quote to accept for replacing the shutters? The cheapest quote may not be the best choice.

Can apartment owners refuse to install aluminium shutters if they cannot afford the cost difference?

Answer: As the lot owner contributes towards the premium, they are an insured party under the policy.

Question: A lot owner carrying out unauthorised renovations experienced a leak. Is the owner responsible for the excess? Will insurance investigate the cause of the leak?

Answer: Several factors will determine how the insurer assesses the claim.

Question: My car got damaged due to a blocked drain caused by debris. Is the body corporate responsible? How do we get our car insurance excess reimbursed?

Answer: The car owner or their insurers would need to demonstrate the body corporate was negligent or otherwise legally liable in relation to the blockage.

Question: Water entered the unit and damaged the floating floors, caused by improperly maintained body corporate assets. As floating floors are not covered by strata insurance, do I have any way of recovering my costs?

Answer: There needs to be strong and clear evidence that the damage was caused by a failure of the body corporate to maintain an item it is responsible for.

Question: Our insurance excess has increased substantially. Should we adjust our budget to factor in the increase in excess?

Answer: The body corporate should pass the excess on to the person responsible rather than budgeting to pay for it.

Question: If body corporate owners actively maintain and manage their buildings, should they have access to better priced strata insurance?

Answer: Body corporate owners who actively maintain and manage their building benefit from not having adverse conditions imposed on their insurance policy.

Question: If a lot owner does not maintain known issues in their lot and this causes damage to common property, are they liable?

Answer: Not only can lot owners face an uninsured loss for damage to their own property, they can also be held liable for damage to other’s property as well.

Question: Our QLD apartment floor was damaged due to a water leak in the drainage pipe behind a dishwasher. The complex is 2 years old and we purchased off the plan. If we wish to claim the damage on insurance, is there a time limit for reporting?

Answer: I would recommend the claim for defective drainage be lodged with the Builder or QBCC as soon as practical.

Question: Does the body corporate have a duty to disclose defects reports to their broker/insurer when renewing their insurance cover?

Answer: If asked why you didn’t disclose, how do you justify that?

Answer: Some insurers are offering a cash settlement for claims and in some instances, this can be a benefit to clients, in other instances is it may not be beneficial to accept a cash settlement.

Question: Lack of maintenance to a shower caused damaged to a hallway. Is the owner responsible for the repairs to common property? How is the insurance claim handled?

Answer: There are 2 options available to the body corporate.

Question: A lot owner reversed their car into common property. The claim for damage was made through the building insurance. Can the Committee pursue the driver for the excess and how?

Answer: Follow the insurer up and confirm the recovery process is underway.

Question: Can an owner make a claim directly to the body corporate insurer without the body corporate inspect the damage and determine responsibility?

Answer: If the committee have concerns about the damage being claimed, they can make representations to the insurer about their concerns.

Question: An overflow sewerage pipe caused damage to carpets. Body corporate insurance removed all carpets, but say they are not responsible for the replacement. Is this really a lot owner’s responsibility?

Answer: Carpet is deemed to be temporary flooring and is therefore the owner’s responsibility to insure under contents insurance.

Question: The gardener handyman does not carry any insurance. Is he covered under the Body Corporate insurance?

Answer: We recommend the body corporate engage contractors who carry appropriate insurance.

Question: Who is liable if a fire sprinkler is faulty and it is activated in an apartment causing water damage to a lot owner’s property?

Answer: Ultimately, the party liable for the damage caused to the lot is the party that is responsible for the maintenance of the faulty sprinkler.

Question: Our Strata insurance covers the building, however I’m responsible to maintain my exterior walls, windows and doors. If this is the case, can I reduce my contribution to the BC insurance?

Answer: It is important to understand the difference between “responsibility to insure” and “responsibility to maintain”.

Question: We are trying to figure out if the roof on our building is covered under our building insurance policy.

Answer: The roof, being a permanent fixture, is covered by strata insurance.

Is the roof covered?

Is the event/damage covered?

Question: What insurance claims can be made when a pressure value fails resulting in damage to carpet, gyprock and kitchen cupboards? The pipes service a number of units in a high rise building?

Answer: The basic principal is that you must claim on the policy that insures the property damaged.

Question: How much do historical claims impact the upcoming year’s strata insurance premium? Is there a ratio?

Answer: Claims history does impact the insurance premium.

Question: Is it possible to insure a Retaining wall? I have tried to insure the retaining wall with my home and contents insurance but the insurance company will not commit.

Answer: You cannot insure items defined as “building” under a policy other than the strata policy, due to the basic principal that you can’t insure part of a building.

Question: I am a new owner in a strata building. How do I find out what is common property and covered by the body corporate insurance? How about changes to my lot that have been made over time. Is there a record of these and what is covered by the insurer?

Answer: The basic principle is that if you pick the unit up and shake it anything that falls out is the lot owners contents

Question: The committee is aware of asbestos in the fire doors but do not wish to disclose this to the broker or the insurer. They’ve engaged an insurer directly. What should the Body Corporate Managers do in this scenario in terms of due diligence and compliance?

Answer: Does the insurer ask about whether there’s any asbestos in the building?

Question: I own an investment unit in a strata building and I have landlord insurance. What is covered under my landlord insurance and what is covered under my strata insurance?

Answer: If you were to pick the unit up and shake it, anything that falls out is lot owner’s contents

Question: Are the compressor units on the roof and the header units inside the apartment, together comprising my air conditioning unit, covered under Strata insurance or my personal contents insurance?

Answer: In Queensland, Airconditioning units that service an individual lot are the lot owners responsibility.

In Queensland, is Your Air conditioning Unit Covered By Strata Insurance?

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