WA: Q&A Maintenance Planning and Strata Insurance

This article discusses Maintenance Planning and Insurance under the upcoming WA Strata Reforms. Maintenance and insurance seem to go hand in hand, as one affects the other.

Table of Contents:

• QUESTION: The accounts show charges for repairs on individual lots. Why weren’t these processed as insurance claims or charged to the owners?


• QUESTION: Will insurance companies in the future require a copy of the 10-year maintenance plan for the renewal of the policy?


• ARTICLE: WA: Maintenance Planning and Insurance: The Strata Titles Amendment Act 2018 (STAA 2018)

Question: The accounts show charges for repairs on individual lots. Why weren’t these processed as insurance claims or charged to the owners?

Last year’s accounts show numerous charges for repairs on individual lots, from blocked toilets to ceiling collapse repairs. These appear to be payments made to maintenance/repair companies for varying amounts from $200 to $3000+. Some smaller charges appear to be related to similar issue. Most, but not all costs are relate to commercial units. No one on the council of owners (COO) approved these payments.

Why would our strata manager not have:

• claimed these items on insurance or


• direct lot owners to carry out any small repairs e.g. a blocked toilet?

Answer: Some repairs are categorised as regular maintenance rather than insurable events.

In managing repairs and maintenance expenses, the following key points are taken into account:

1. Approved Budget and Delegated Authority: Each year, the scheme approves a budget that includes allocations for essential repairs and maintenance. This budget allows the strata manager to authorise necessary repairs under certain line items without needing specific approval from the COO for every expense. This enables efficient and timely responses to issues, particularly those that could impact the safety or functionality of the property.


2. Insurance Policy Terms and Claim Thresholds: When assessing whether an item is claimable, the strata manager reviews the insurance policy’s terms, including the claim excess. If the repair cost is below the policy excess or the item is not covered under the terms (e.g., general wear and tear or maintenance), it is generally more cost-effective for the scheme to fund the repair directly rather than lodge an insurance claim.


3. Nature of Repairs: Certain repairs, such as those for blocked toilets or maintenance issues, are typically categorised as regular maintenance rather than insurable events. Insurance is intended for sudden or accidental damage rather than ongoing or gradual issues, so these types of repairs are usually handled directly and, where relevant, may be the responsibility of individual lot owners.


4. Commercial Units: Commercial units may occasionally have unique repair requirements due to their structure or shared facilities. Where repairs relate to common property or are in the interest of maintaining safety and functionality across the scheme, the strata manager may address these expenses under the scheme’s budget.


5. COO Involvement for Significant Expenditures: While the strata manager uses delegated authority for routine or urgent repairs within budget allocations, larger or unusual expenses are generally referred to the COO for approval to ensure alignment with the council’s priorities.

This approach, based on the approved budget and policy limitations, allows the strata manager to balance efficiency in addressing repairs with prudent financial management.

Rick Blampey SVN Perth E: rblampey@svn.com.au P: 08 9427 7955

This post appears in the December 2024 edition of The WA Strata Magazine.

Question: Will insurance companies in the future require a copy of the 10-year maintenance plan for the renewal of the policy?

Answer: From a maintenance point of view the condition reporting section of the 10year plan is important as this highlights any aspects of the building that may need immediate attention.

I am unable to answer for the future. Presently however insurers ask many questions, before providing quotations and forthcoming renewal terms, so that they are satisfied issuing terms, after considering the property risk.  Presently some insurers are asking questions, regarding any recent building reports and whether the strata is aware of any known maintenance defects, or new building defects, cladding and so forth.

From a maintenance point of view the condition reporting section of the 10 year plan is important as this highlights any aspects of the building that may need immediate attention.  Depending on what that is, it may be something that you need to disclose to your insurer to ensure your cover is not limited or reduced, which could result if you did not disclose it to them.  

Leonie Milonas PSC Property Lync Insurance Brokers E: leonie@lyncinsure.com.au P: 1300 127 503

General Disclaimer: This response is prepared for informational purposes only and is a general response only. It is not insurance, financial or legal advice and should not be relied on as insurance, financial, strata or legal ad­vice. Before you act you should seek specific advice by consulting with a qualified insurance advisor, a strata consultant or seek legal advice.

This post appears in Strata News #461.

WA: Maintenance Planning and Insurance: The Strata Titles Amendment Act 2018 (STAA 2018)

Maintenance Planning – What is it?

One of the functions of a strata company is to understand and undertake its maintenance obligations in relation to the common property. This currently includes addressing any maintenance issues as they arise and coordinating the repair, replacement or upgrade to rectify the issue.

The future strata reform goes one step further, as it requires strata companies (Defined as – Designated Strata Scheme = 10 lots and over or as defined by the regulations, strata company – see Table 1.0 below) to implement a 10 year maintenance plan.

The plan is to be revised at least every 5 years at which point it will be updated for a further 10 years. The plan must be submitted at each Annual General Meeting.

Maintenance Plan – How to prepare them?

The maintenance plan should be prepared by someone with sufficient building industry technical knowledge and experience. We asked HFM Asset Management to explain how they prepare a maintenance plan.

• Obtain Building Information – The more information you provide the more accurate the assessment will be, we always request the following information:
  • Strata Plan
  • Building Drawings & Operating & Maintenance Manuals, asset lists
  • Existing maintenance contracts
  • Previous 5 years of services records including costs etc
• Undertake the Site Inspection
  • Develop / update the asset list
  • Undertake a risk assessment
  • Confirm condition & life cycle assessment
  • Undertake risk assessment
• Reserve Fund
  • A reserve fund is to be prepared and maintenance planning costs are a key component of the reserve fund forecast.
  • The reserve fund accumulation is required to meet future repairs, replacement and upgrades.

How does all of this work with Insurance?

The implementation of a maintenance plan will have many positive effects for your strata company. There will be less unexpected emergency repairs, less special levies to raise at a moments notice and your insurance company is likely to love you too.

Maintenance arises from fair wear and tear, accidental damage or inherent defect and as it occurs it is the Strata Companies responsibility, as per the current & future Strata Titles act, to fix it.

Your Insurer understands that this is life and these things happen. However, if your Strata Company has a history of past neglect when it comes to maintenance issues, which has then led to matters becoming urgent repairs, your insurer may see your track record of not addressing known issues as an increased risk when insuring you.

For example:

• Past neglect of maintenance when required has led to such urgent matters like;
  • A visible rusted roof that allows water to ingress into the building and now requires replacement urgently.
  • A frequency of burst pipes allows water to ingress and cause damage. A plumbing report has revealed an issue of corrosion and suggests the pipes have exceeded their useful life, repairs become urgent even though something could have been done prior.

Such examples have led to many claims and in turn this has increased premiums and imposed high excess on your insurance. It is important to note that known issues, lack of maintenance or defects are exclusions of strata insurance policies, so most claims of this nature are likely to be declined.

Being transparent with your Insurance Company is always the best policy and they may happily accept the increased risk with or without conditions placed on your policy, but they will still want to know what you are doing about the repairs.

This is why the implementation of a good maintenance plan offers great peace of mind with:-

• Less of those nasty incidents that can affect how you live
• Less frequency of claiming on your insurer, avoiding premium increases, excesses and coverage reductions.

Leonie Milonas PSC Property Lync Insurance Brokers E: leonie@lyncinsure.com.au P: 1300 127 503

David Chokolich HFM Asset Management P: 1300 021 420 E: info@hfmassets.com.au Other articles by HFM’s team.

This post appears in Strata News #238.

Please note: this article was provided prior to the proclamation of the new strata title amendments.

Have a question about maintenance planning or something to add to the article? Leave a comment below.

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Important note: The Regulations at the time of writing have not yet been released for the new Strata Titles Amendments Act 2018. The regulations will define further obligations and requirements and this is referenced in some sections above and throughout the Act.

General Disclosure: This article is prepared for informational purposes only, and is not insurance, financial or legal advice and should not be relied on as insurance, financial or legal advice. You should consult with a qualified insurance or legal advisor. PSC Property Lync Insurance Brokers is an Authorised Representative (AR 1235681) of Professional Services Corporation Pty Ltd (AFSL 305491).

Reference made to:

• https://www0.landgate.wa.gov.au/titles-and-surveys/strata-reform
• https://www.legislation.wa.gov.au/legislation/statutes.nsf/main_mrtitle_938_homepage.html
• https://www.legislation.gov.au/Details/C2016C00820

Read next:

• WA Strata Titles Amendment Act 2018: duties of a council member and how to protect yourself from liability
• WA: Reforms to WA Strata Legislation – As a Lot Owner, Should I Care?
• WA Strata Reform – Reserve Funds and Maintenance Planning by David Chokolich

1 May 2020 Update: The amended Strata Titles Act 1985 took effect in Western Australia on 1 May 2020. It includes grace periods for some new requirements to ensure those affected have adequate time to meet them. This information has been taken from Landgate: Timelines for Change.

Improving strata management and by-laws: Introduction of 10-year maintenance plan and reserve fund.

Visit Strata Law Reform, Strata Insurance, Maintenance and Common Property OR Strata Information WA pages.

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