QLD: Dishwashers, washing machines and body corporate insurance

Tyrone Shandiman, Strata Insurance Solutions

6 years ago

This article provides Q&As received from QLD lot owner’s about strata title insurance coverage for water damaged caused by apartment appliances such as dishwashers and washing machines.

Table of Contents:

QUESTION: My hot water system ruptured and caused damage to the kitchen cupboards. My landlord insurance says to contact the body corporate. My body corporate says it is a landlord insurance issue. Can you help?

QUESTION: For insurance purposes, is the breakdown of a washing machine that caused damage to the lot and the lot below considered an event? Who pays the excess?

QUESTION: The supplied washing machine valve in our rented QLD unit failed and resulted in a leak that caused damage to the unit’s ceiling below. We are being pressured to pay for the repair? Who is responsible?

QUESTION: Is an individual apartment dishwasher covered under the body corporate’s strata building insurance or do they fall under lot owner’s contents insurance?

QUESTION: Could you please confirm that a plumbed-in dishwasher is excluded from strata title insurance under Strata regulation in QLD?

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Question: My hot water system ruptured and caused damage to the kitchen cupboards. My landlord insurance says to contact the body corporate. My body corporate says it is a landlord insurance issue. Can you help?

I have an apartment in a Queensland body corporate. My hot water system, located in the kitchen cupboard, ruptured and leaked. I have landlord insurance, but the insurer says they are not responsible because the kitchen cupboards are part of the building, and they are not responsible for covering building issues. They suggested I refer the matter to the body corporate.

The body corporate says their insurance does not cover “kitchen, bathroom and bedroom cupboards”. I feel stuck. Can you help?

Answer: Various regulations apply to body corporates depending on which regulation module your scheme is registered under.

The definition of a building under a strata policy is generally worded along the lines of: Building means buildings as defined in the strata legislation applying 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, there are various regulations that 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 – Act Section 1898 (195)

Part 6 Insurance – Act Section 1898 (195) defines a 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 the 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 the December 2024 edition of The QLD Strata Magazine.

Question: For insurance purposes, is the breakdown of a washing machine that caused damage to the lot and the lot below considered an event? Who pays the excess?

I refer to Section 193(4) Excess in the Body Corporate and Community Management (Accommodation Module) Regulation 2020, or Section 122(4) of the Body Corporate and Community Management (Small Schemes Module) Regulation 2020 that state:

2 or more lots—the body corporate should pay the excess unless the body corporate decides it is reasonable for the excess to be paid by 1 or more of the affected lots

I am seeking clarification of what an “event” and “affect” means.

We have a situation where a washing machine breakdown caused a flood in a laundry with the water flowing onto a hallway carpet before seeping into and damaging the ceiling below.

The washing machine was replaced (damaged), the laundry floor cleaned (affected), and fans used to dry the carpet (affected).

Does this constitute an event occurring in both apartments and have both lots been affected?

Who is responsible for paying the excess, and does the body corporate committee have any responsibility in the matter?

Answer: Ultimately, the body corporate committee can exercise its judgment on the issue of excess.

The BCCM Act does not explicitly define what constitutes an “event”. However, it is generally understood that an event refers to a specific incident or occurrence that sets in motion a sequence of events leading to an insurance claim. In the scenario you described, where a washing machine breakdown caused flooding that affected another lot, in my view this situation can indeed be considered as a single event since it originated from a singular cause.

Regarding what it means to be “affected,” in my view, it involves any lot that has experienced damage or any form of impact directly resulting from the event. In this case, both the lot containing the washing machine and the lot below it, which suffered water damage to the ceiling, should be considered affected. The primary lot experienced direct damage, while the secondary lot was indirectly impacted through water damage originating from the first lot.

Given this situation, the BCCM Act allows the body corporate committee some discretion in deciding who is responsible for paying the insurance excess. This decision must be based on reasonable grounds, taking into account all circumstances surrounding the event. Factors to consider may include whether the event was foreseeable, whether the washing machine owner could have taken measures to prevent the incident and the extent to which each lot was affected.

In this instance, it is my view that it could be viewed as reasonable for the owner of the lot with the broken washing machine to bear the responsibility for paying the excess, given that the origin of the damage was within their control. Alternatively, the body corporate could also opt to pay the excess, particularly if it determines that this approach is more equitable or if the cause of the breakdown was not due to negligence on the part of the lot owner.

Ultimately, the body corporate committee has the option to exercise its judgment on this issue.

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

This post appears in the November 2024 edition of The QLD Strata Magazine.

Question: The supplied washing machine valve in our rented QLD unit failed and resulted in a leak that caused damage to the unit’s ceiling below. We are being pressured to pay for the repair? Who is responsible?

The supplied washing machine valve in our rented QLD unit failed and resulted in a leak that caused damage to the unit’s ceiling below. Our landlord insurance policy was denied. Two appeals were also denied. The strata manager advised building insurance excess for water damage is $5000. The 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?

Answer: Submit 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.

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 E: tshandiman@iaa.net.au P: 1300 554 165

This post appears in Strata News #565.

Question: Is an individual apartment dishwasher covered under the body corporate’s strata building insurance or do they fall under lot owner’s contents insurance?

Does an apartment’s dishwasher form part of entire building insured value? And if so, is it insured under the strata building insurance? Does that mean when the dishwasher is retired, the Body Corp’s sinking fund must replace it with the same model? Are there replacement model and value bylaws required?

Or, do individual apartment dishwashers fall under lot owner’s contents insurance?

Answer: While the Body Corporate may have responsibility to insure items in your lot, outside of what is paid for by an insurer in an insurance claim you are responsible for maintaining property in your lot.

There can often be a misunderstanding about “Responsibility to Insure” vs “Responsibility to Maintain (ownership)”.

While the Body Corporate may have responsibility to insure items in your lot, outside of what is paid for by an insurer in an insurance claim you are responsible for maintaining property in your lot.

So if the dishwasher breaks down and it is not an insurance claim, the lot owner is responsible for repairs to the dishwasher. If the dishwasher is burnt in a kitchen fire and is insured by the strata policy, the strata insurer pays.

Like with other permanent fixtures and fittings, the strata policy will provide cover for those fixtures and they can not be covered by contents insurance. But if an insurance claim does not cover those fittings, the lot owner has responsibility to maintain the fittings (i.e. for maintenance).

Lot owners should have contents insurance to cover things not insured by strata insurance such as but not limited to carpet, curtains, appliances not plumbed or fixed in & aircon units servicing an individual lot (QLD only).

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

Question: Could you please confirm that a plumbed-in dishwasher is excluded from strata title insurance under Strata regulation in QLD?

Could you please confirm that a plumbed-in dishwasher is excluded from strata title insurance under Strata regulation in QLD? The dishwasher is installed inside the unit and owned by landlord but it is plumbed-in.

Strata Insurance says it is not covered under the Strata Insurance policy as per QLD Legislation.

Answer: If it is a permanently built-in dishwasher that is plumbed in then it should fit the definition of building for insurance purposes (like with ovens).

Under the Body Corporate and Community Management (Standard Module) Regulation 2008 for the purpose of insurance building as defined as:

The building includes improvements and fixtures (but not including carpet) 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

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

If the dishwasher is able to be removed by the owner then it is my understanding that it does not fit the definition of a fixture and needs to be claimed on the owner’s landlords insurance.

If it is a permanently built-in dishwasher that is plumbed in then it should fit the definition of building for insurance purposes (like with ovens). To avoid any issues with insurance owners should have landlords or contents insurance to avoid gaps in cover.

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

This post appears in Strata News #232.

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