NAT: Q&A Strata Insurance Dispute Resolution Process

Tyrone Shandiman, Strata Insurance Solutions

2 years ago

This article is about the strata insurance dispute resolution process.

Table of Contents:

QUESTION: Should I be held responsible for repairs to the damaged ceiling below my unit when the BC initially accepted responsibility and delayed repairs?

QUESTION: If we had a partial loss of rent due to water damage, can we file a claim with the strata insurance to recoup the partially lost rent?

QUESTION: The remediation of damage from an incident requires the lot owner to vacate their premises for repairs. Does the strata insurer handling the claim have a ‘duty of care’ to the affected lot owner?

QUESTION: A garbage truck damaged our external wall. The company’s insurance paid to repair the damage but we are not happy with the finish. What happens now?

QUESTION: While waiting for dispute resolution on a claim, can you repair damaged areas?

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Question: Should I be held responsible for repairs to the damaged ceiling below my unit when the BC initially accepted responsibility and delayed repairs?

A damaged ceiling in my Queensland investment unit triggered an insurance claim by the unit below. The initial repair quote was $2,000, allegedly due to membrane failure in my bathroom. The body corporate accepted responsibility but took six months to initiate repairs. When I asked about the delay, they said rectification was my responsibility. An independent inspection could not confirm membrane failure or moisture in the subfloor.

The insurer’s final cost was $4,000, significantly higher than the initial quote. The lot owner below and the body corporate accepted a cash settlement of $1,500. I received an invoice for $3,000, covering the shortfall and excess, even though the body corporate caused the majority of the delay.

Is it fair that I bear the financial burden given the body corporate’s initial acceptance of responsibility and the significant delay? Could obtaining a second quote have helped prevent this situation? Why was the repair cost exorbitant for a minor issue?

Answer: Request a formal letter of demand from the body corporate or the owner below.

There seems to be some complexities involving the body corporate’s expectations and your responsibilities under the BCCM Act. The act does require property owners to keep their properties in good condition, and it seems the body corporate is applying this to the damage caused by what was initially thought to be a membrane failure.

Given the circumstances and the financial discrepancies involved, it would be prudent to request a formal letter of demand from the body corporate or the owner below. This letter should clearly explain why they believe you are responsible for the costs. Once you have this, you could submit a claim under the Public Liability section of your landlord’s/contents insurance, which generally covers legal liabilities for property damage. If you firmly believe the responsibility for these costs does not fall to you, you have the right to contest this. You can deny the responsibility, refuse to pay the excess, and potentially take the matter to the Body Corporate and Community Management (BCCM) commissioner for dispute resolution. Here is the link for more information on the dispute process: Disputes in a body corporate.

Lastly, regarding obtaining a second quote, while it is generally a sensible idea to secure multiple quotes to ensure repair costs are reasonable, neither the lot owner nor the body corporate are specifically required to do so. This means you could still be liable for the costs incurred. I recommend asking the body corporate for an explanation regarding the shortfall in payment. It’s possible that the insurer initially agreed to cover the repairs at a certain cost, but due to delays, they may have reduced their liability to the amount it would have cost initially had the repairs been completed within a reasonable timeframe.

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 October 2024 edition of The QLD Strata Magazine.

Question: If we had a partial loss of rent due to water damage, can we file a claim with the strata insurance to recoup the partially lost rent?

Due to recent water damage in our unit, we’ve experienced a partial loss of rent. As the damage only affected one bedroom, we had to reduce the rent because of the loss of amenity. Unfortunately, our insurance doesn’t cover a partial loss of income. Could we file a claim with the strata insurance to recoup the lost rent?

Answer: This process determines whether the owners corporation’s actions, or lack thereof, directly contributed to the damage, thereby establishing their liability.

A lot owner has the right to submit a legal demand to the owners corporation if they suspect the owners corporation’s negligence, such as failing to maintain common property, has led to damage, e.g., a leak originating from common areas. In response to such a demand, the owners corporation can pursue a claim under the public liability section of their insurance policy. The decision to accept or deny this claim will then rest with the insurer, who will evaluate the circumstances against legal principles of negligence. This process determines whether the owners corporation’s actions, or lack thereof, directly contributed to the damage, thereby establishing their liability.

To submit a demand, the lot owner must prepare a letter to the owners corporation. This letter should include:

The date and specifics of the incident causing the loss.

An explanation of why the lot owner deems the owners corporation liable or negligent.

A detailed summary of the costs incurred, supported by invoices, rental ledgers, or other relevant documentation.

Instructions on where the compensation should be paid.

In this particular instance, before proceeding with a demand against the owners corporation, the lot owner should revisit the property damage claim first. Specifically, the owner should query the insurer regarding the partial coverage decision, emphasising the impact of partial occupancy associated with rental loss. Insurance policies often cover scenarios of partial loss of use, so it’s possible that further discussion or clarification of the policy terms could lead to a more favourable outcome regarding loss of rent coverage.

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

This post appears in the July 2024 edition of The NSW Strata Magazine.

Question: The remediation of damage from an incident requires the lot owner to vacate their premises for repairs. Does the strata insurer handling the claim have a ‘duty of care’ to the affected lot owner?

Answer: In the context of an insurance claim, insurers and their contractors have a duty of care.

Duty of care is an obligation imposed on individuals and organisations to take reasonable measures to prevent foreseeable harm or injury to others.

In the context of an insurance claim, insurers and their contractors have a duty of care.

Legal claims associated with duty of care and negligence can be highly nuanced and are considered on a case-by-case scenario by legal professionals and judges (if the claim ends up in court). Claims are never black and white, and legal liability will vary based on the circumstances. The outcome of such claims depends on various factors, including policy terms and conditions, foreseeability, reasonable care, proximity, breach of duty, causation, statutory duty and contributory negligence.

It’s crucial to understand that while the standard of care imposed on insurers is high, it is not unlimited. Policyholders also bear a responsibility to take reasonable measures to prevent foreseeable harm or injury and mitigate damage to the best of their ability.

If you believe the insurer has breached their duty of care, depending on the severity of the issue, you should first raise concerns with the insurer. In some cases, referring your concerns through the dispute resolution process may be appropriate. In more complex or severe circumstances, it may be appropriate to seek legal advice.

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

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

Question: A garbage truck damaged our external wall. The company’s insurance paid to repair the damage but we are not happy with the finish. What happens now?

Our building is located in NSW. A garbage truck knocked down part of our front complex wall. Repairs were carried out through the garbage truck company’s insurer.

Repairs were not carried out satisfactorily. You can see where the wall was repaired. The rendering does not match the original finish of the wall.

The committee notified the company over 2 months ago to say the repairs were not carried out to a satisfactory standard. We have followed up and been told their “insurance company is still considering” the next steps and the tradespersons disagree the job has not been completed satisfactorily.

Where do we complain?

Answer: Have another tradesperson provide a report and a quote to rectify the unsatisfactory work.

Workmanship issues can arise from time to time with claims and such claims can be technical and may end in the builder and property owner not agreeing on the issue.

The best way to dispute that the works are not done to an acceptable standard would be to have another tradesperson provide a report and a quote to rectify the unsatisfactory work.

If the claim is through the strata insurer and they arranged the repairer, they will have to warranty the work and you can refer your concerns to the insurer.

If you arranged repairs yourself and lodged a claim via strata insurance, you would need to dispute this with the repairer or if applicable and necessary, via the process set out on NSW Fair Trading for “Home building dispute resolution”.

If the work was carried out by the owner of the trucks’ insurer rather than the owners corporation’s insurer, you could alternatively lodge a letter of demand with a report and quote to their insurer to rectify the work.

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

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

Question: While waiting for dispute resolution on a claim, can you repair damaged areas?

Answer: Repairing during dispute resolution is something I would highly recommend if you have the means to do so.

Absolutely. Yes, you should. If the insurer has assessed and denied the claim, conducting repairs will not be prejudicial to your claim.

Repairing during dispute resolution is something I would highly recommend if you have the means to do so. The reason why this can be useful for you is if the insurance company is using expert witnesses and you engage a builder to do the repairs, they might find something that the expert witnesses have said which isn’t right or correct. Repairing damage with a qualified builder or tradesman is a really good opportunity for you to get information about the insurer’s expert witness report and you may get that advice for free.

If you’re paying a builder to do a repair, they’re probably more than happy to put a few sentences together in an email as to whether they disagree with a certain report and why.

Also, carrying out repairs at that stage is going to help you in quantifying your loss. If you’ve got the final invoice, you can add that to your dispute submission.

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

This post appears in the December 2022 edition of The NSW Strata Magazine.

Have a question about the strata insurance dispute resolution process or something to add to the article? Leave a comment below.

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