WA: Q&A Strata Insurance for common driveway

These questions are about strata insurance for common driveway.

Table of Contents:

• QUESTION: Our small plan of five detached lots contributes to building insurance. If one owner refuses to pay their share, can we pursue the outstanding money as a late levy payment? Can we charge interest?
• QUESTION: I own a rear duplex that shares a garage firewall with the front duplex on the block. Is the home part of a strata title complex for the purposes of home insurance?
• QUESTION: In our small strata scheme, every year when the strata insurance premium is due, we have difficulty collecting payment from all owners. Do you have any tips on how to do this? Will the insurance company take part payment?
• QUESTION: In a group of 3 villas, do we need to have a strata committee? Do we need shared strata community insurance?
• QUESTION: We currently pay Strata Insurance but we do not share a common driveway. We have no other common property. Can we arrange our own strata insurance?
• QUESTION: Where do we stand for Strata Insurance for the common driveway? Are we able to separately insure the common driveway without having to take out insurance for the whole strata plan?

Question: Our small plan of five detached lots contributes to building insurance. If one owner refuses to pay their share, can we pursue the outstanding money as a late levy payment? Can we charge interest?

Our strata plan consists of five detached lots sharing a common driveway. We don’t have a council of owners but buy joint strata building insurance. What do we do if one owner doesn’t pay their share of the insurance premium?

For the premium to be valid, it has to be paid in full before the expiry date. One owner refuses to contribute. If all other owners increase their payment to cover the deficit, what action can we take to recover this money?

Can overdue insurance payments be pursued similarly to late levies? Can we charge interest on the amount owed?

Answer: It will depend on whether you have an admin fund in place or not.

If an admin fund is in place

Unless your strata scheme has scheme by-laws for a 3, 4 or 5-lot scheme that exempt the strata company from a designated function under section 140, insurance premiums would form part of your strata company budget even if it is the only expenditure item in the budget. In this case, funds raised to meet that premium are strata levies. The levy may be an annual levy due and payable just before your insurance renewal.

Provided the levy to meet the insurance premium is raised at a general meeting of the strata company via approval of the strata company budget in accordance with Section 102(1) of the Strata Titles Act 1985 (STA1985) and levied in accordance with section 100, the strata company can apply interest at the rate set out in the general regulations (11% at this time).

Section 102(1) states:

Budget

“A strata company must prepare a budget for each financial year and submit it for approval to its annual general meeting.

Section 100(1)(a) and (b) state:

Administrative and reserve funds and contributions

1. A strata company must —
   
   1. establish a fund (an administrative fund) for administrative expenses that is sufficient in the opinion of the strata company for the control and management of the common property, for the payment of any premiums of insurance and the discharge of any other obligation of the strata company; and
   2. determine the amounts to be raised for payment into the administrative fund; …

If no admin fund is in place

Should your strata company not have an administration fund, being a single tier strata scheme (a scheme where no lot sits above or below another lot), sections 53E of the STA1985 become relevant. This section states:

53E. Recovery of premium by strata company or owner if no administrative fund in single tier strata schemes

1. If —
   1. in accordance with section 140, an administrative fund is not maintained by a strata company under section 100(1)(a); and
   2. the strata company or the owner of a lot receives notice of the amount of any premium or other charge for insurance under clause 53D, the strata company, or the owner, may give notice in writing of that amount to the owner of each lot in the scheme, or each other owner, and require the owner to pay a share of the premium or other charge before a specified time.
2. The share payable by the owner of a lot is —
   
   1. a sum equal to the same proportion of the amount as the unit entitlement of the lot bears to the sum of the unit entitlements of all the lots in the scheme; or
   2. if applicable, a sum fixed under the scheme by-laws.
3. If —
   
   1. notice has been given to the owner of a lot under subclause (1); and
   2. the amount of the owner’s share has not been paid to the strata company or the insurer before the specified time, that amount becomes a debt due by the owner to the strata company and may be recovered by it in a court of competent jurisdiction.
4. If the amount of an owner’s share has become due to the strata company but has not been paid, the owner of another lot may —
   
   1. pay the amount; and
   2. recover the amount as a debt on application to the Tribunal.

Luke Downie
Realmark
E: ldownie@realmark.com.au
P: 08 9328 0999

This post appears in Strata News #681.

Question: I own a rear duplex that shares a garage firewall with the front duplex on the block. Is the home part of a strata title complex for the purposes of home insurance?

I own a rear duplex that shares a garage firewall with the front duplex on the block.

I own my lot including the driveway to the front of the block. The front duplex and I have no common areas.

The Certificate of Title states “Lot of 2 of Strata of strata plan XXXXX ….. together with a share in property (if any) as set out on the Strata Titles Plan”.

When I’m applying for home insurance, multiple insurance companies state they don’t insure strata-title buildings, however, they do cover contents.

Is the home part of a strata title complex for the purposes of home insurance?

Answer: Insuring both buildings and common property areas under one strata insurance policy is the only way to ensure that you are both complying with the STA and all your insurable assets.

As a general response to your query, your strata and lots may be considered under the Strata Titles Act 1985 as a Single Tier Scheme. The only way to properly confirm this is by reviewing your strata plan and checking your boundary definitions, however if this does apply, this may enable you and other owners to insure your buildings within your Lots separately. You should verify this first, before you decide to do this. If you do both elect to insure separately, then for insurance purposes generally, you should advise your insurers when seeking quotations for your building by saying that it is not part of a strata as both owners of the duplex have agreed to insure separately as per your rights under Schedule 2A clauses 53A-53E of the Strata Titles Act (STA).

The only issue is what is common property under your strata plan, such as the driveway and the fence along such, but as we do not have a copy of your strata plan we are unable to advise you regarding this. It is recommended that any insurer includes the driveway, services under such and the fences under their policy, but this needs to be clarified in writing by the insurer. Some insurers will not be willing to cover the driveway and fences along a common property driveway. You would need to consider common property insurance.

Insuring both buildings and common property areas under one strata insurance policy is the only way to ensure that you are both complying with the STA and all your insurable assets. You should refer to the STA for completeness or contact a strata consultant to understand better your obligations.

This link directs you to the Strata Titles Act 1985 WA: Strata Titles Act 1985 – refer to Schedule 2A Part 5 Insurance from clause 53A, as referenced above Lots in a Single Tier Strata Scheme.

Disclaimer

This email response is 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 strata consultant or legal advisor and further a qualified insurance advisor.

PSC Property Lync Insurance Brokers is an Authorised Representative (AR 1235681) of Professional Services Corporation Pty Ltd (AFSL 305491.

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

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

Question: In our small strata scheme, every year when the strata insurance premium is due, we have difficulty collecting payment from all owners. Do you have any tips on how to do this? Will the insurance company take part payment?

I’m the voluntary strata manager for a small unit complex in Perth. I’ve been in this role for 15 years and dislike it immensely, but I am the only one who will take on the role.

Every year when the strata insurance premium is due, I have immense difficulty securing payment of their portion from two of the owners.

We always end up OK by the due date, but I hate the anxiety associated with chasing up the money.

Is there an easier way? I’ve played the “I’ll quit if you don’t make your payment on time” card a couple of times.

Do strata insurance companies accept partial payments if some unit owners are tardy in meeting their obligation?

Answer: Advise all owners that, in future, all payments will be required 2 days prior to the policy expiry date.

The Strata Company (all owners) have an obligation under the legislation to insure for full replacement value of the complex. As a voluntary manager you are only trying to ensure the Strata Company meets it’s obligations.

Some insurers, especially if you have a history with them, will allow a 28 day extension on the policy. If the due date is an issue, this may provide you with the confidence that the policy will be paid regardless and takes the onus off you as a volunteer to ensure the funds are received on time. It would be worth asking your insurers if they would allow this. Even 14 days would take the pressure off. This information does not need to be advised to all owners as this is an extension and is only there if required.

In relation to dealing with the other owners, it may be worth advising them that, in future, all payments will be required 2 days prior to the expiry date. On the day prior to the insurance renewal date, you will be providing the insurer with the instructions to place the policy to ensure it is in place prior to expiry. This will hopefully ensure the owners have their money to you in advance.

The insurers will not normally accept partial payments – they will insure to the limit that the funds will allow and this may leave the Strata Company under insured.

Shelley Fitzgerald
Emerson Raine
E: shelley@emersonraine.com.au
P: 9330 3959

This post appears in the August 2022 edition of The WA Strata Magazine.

Question: In a group of 3 villas, do we need to have a strata committee? Do we need shared strata community insurance?

I am the owner in a group of 3 units. We have a shared driveway for the middle and back villa).

We have always paid strata community insurance by all being sent the invoice and splitting the bill by 3. I have now been told by the insurer that we need to have a strata committee and he can only speak with the strata chair, and we should all be paying it together. If there are less than 4 villas, is it a requirement the have strata meetings, committee, AGM’s, etc.

In a group of 3 villas, do we need to:

1. have a strata committee?
2. shared strata community insurance?

Should we change insurance companies? 

Answer: Strata Schemes of 3 to 5 lots can have by-laws exempting them from certain requirements

Under section 140 of the Strata Titles Act 1985 Strata Schemes of 3 to 5 lots can have by-laws exempting them from the following:

• Having an administrative fund,
• Keeping accounting records and preparing a financial statement,
• Keeping minutes,
• Having a designated Strata Letterbox, and
• Keeping a roll of owners.

In the case of a three lot scheme such as yours, all owners automatically form the council of owners.

If you are not sure if your strata company has such by-laws in place it might be worth seeking guidance from a strata specialist.

In relation to insurance there are a number of factors to be considered. These factors are:

• If your strata scheme is a single strata scheme (no lot above or below another lot) or a multi-tier scheme,
• If your scheme is a survey strata plan or strata plan.

Single tier strata schemes may dispense of its insurance obligations (Insurance of insurable assets that are common property and insurance in respect of damage to property, death, bodily injury or illness for which the owners of lots in the scheme could become liable in damages as holders of the common property) by passing a resolution without dissent (no vote against). It is important to be aware that one owner can revoke the resolution.

From your question I gather that your strata scheme has a strata insurance policy and the arrangement you have is for the premium to be divided and paid by each lot owner. This arrangement in my mind is fine for a three lot strata scheme. In terms of changing insurers I would suggest that this is done by seeking terms from alternate insurers prior to renewal. An insurance broker would be able to assist you with this process. It is important to ensure that you compare coverage between the different policies to ensure that you understand any differences and that the chosen policy meets the requirements for your three owners.

Luke Downie
Realmark
E: ldownie@realmark.com.au
P: 08 9328 0999

This post appears in Strata News #454.

Question: We currently pay Strata Insurance but we do not share a common driveway. We have no other common property. Can we arrange our own strata insurance?

I have a question regarding strata insurance when we don’t have a common driveway. We live in Western Australia and I am currently the owner of one of two property on a strata plan. There is a total of 2 single storey properties and each of us has our own driveway. There is a fence dividing our respective property and we pay for our own utilities bill etc so that there is no common property or shared invoices.

The only expenses we shared is the strata insurance. This has been the case since we both of us purchased from the original owners. I was wondering if we need strata insurance or can we pay for our own building and content insurance as we do not share a common driveway.

Answer: The Strata Titles Act 1985 provides different insurance requirements for the different types of strata plans, hence it will depend on the type of strata plan that you have.

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

The Strata Titles Act 1985 (STA) provides different insurance requirements for the different types of strata plans, hence it will depend on the type of strata plan that you have.

Sometimes, common property can exist without you realising it. As you have described it may fall under the section of the STA – Lots in Single Tier Strata Scheme s53B. Within this section it provides an option that enables a Proprietor to insure, or the Strata company to determine to jointly insure. In the first instance, any determination made by the Strata Company (ie the two lot proprietors) must be in accordance with the requirements of the STA.

Generally, strata insurance is accepted as a cost-effective way to obtain broad coverage, further with the knowledge that both buildings are insured. You may wish to refer to a strata lawyer or consultant for specific advice regarding your strata plan and on how to achieve your desired outcome, whether it be to jointly insured via the Strata Company or to separate the insurance and take care of such as individuals.

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

This post appears in Strata News #223.

Question: Where do we stand for Strata Insurance for the common driveway? Are we able to separately insure the common driveway without having to take out insurance for the whole strata plan?

I own the end villa of a 3 villa strata plan in Western Australia. From the time I bought my villa, individual owners were responsible for their own insurance coverage of their respective villas. The front villa has its own street frontage and driveway. The middle villa and my villa share a common driveway.

I discovered that because each villa is insured individually by their respective owners, the common driveway shared by the middle villa and my villa is not currently insured.

My questions about the strata insurance for common driveway are:

• Are we able to just insure the common driveway, without having to take out insurance for the whole strata plan? Each owner is happy with the current situation where we are individually responsible for our respective building and contents insurance.
• Is there a required level of insurance that common driveways should be insured for?
• What insurance companies deal in strata insurance for the common driveway? I tried a couple of the mainstream insurers, and they all basically said the only way is for all the owners to insure the strata plan.

Answer: Obtaining insurance for common property only is difficult but can be arranged in certain circumstances.

Obtaining insurance for common property only is difficult, but can be arranged in certain circumstances. Understanding the strata plan is important when considering the insurance arrangements.

In terms of individual insurance for your unit, this is allowable under the Western Australian Strata Titles Act 1985 (STA) only in certain circumstances and you should obtain advice in this regard. It is important to understand your strata plan boundaries.

There a required level of insurance that common driveways should be insured for. STA requires you insure for a minimum of $5,000,000 legal liability. In our current strata insurance market, this is considered a very low amount, as legal liability claims can amount to much higher limits, given they usually take a long time to settle and involve injury or harm to people or property. The new strata reforms around Australia and moving to much higher limits of $20,000,000 legal liability, as minimum amounts.

There are limited companies that deal with insuring common driveways and it very much depends on the circumstances of the strata plan and its boundaries. The most complete and best way to insure strata properties is where all owners take on residential strata insurance for the strata plan. For strata and common property insurance arrangements, you should seek advice from a qualified insurance broker or your strata manager to help you understand your strata plan and insurance requirements.

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

This post appears in Strata News #176.

Have a question about strata insurance for a common driveway or something to add to the article? Leave a comment below.

Embed

The above is a general response only to questions asked, not taking into account personal circumstances and is not legal advice. See General Advice Warning.

General Advice Warning
This advice has been prepared without taking into account the client’s objectives, financial situation or needs. Because of that, before acting on the above advice, the client should consider its appropriateness (having regard to their objectives, needs, and financial situation).

If the advice is related to the acquisition of an insurance contract, the client should obtain a Product Disclosure Statement relating to the product before deciding whether to acquire it.

Please note this advice was provided prior to the proclamation of the new strata title amendments and will be updated in due course.

Read next:

• WA: Q&A What insurance do I need for a strata property?
• WA: Insurance for Common Property & Your Lot Explained

Visit Strata Insurance OR Strata Information WA.

Looking for strata information concerning your state? For state-specific strata information, try here.

After a free PDF of this article? Log into your existing LookUpStrata Account to download the printable file. Not a member? Simple – join for free on our Registration page.