Insurance is an essential part of protecting your strata property against the cost of insurable events which would otherwise be a significant unplanned expense. It is also important to act quickly with arranging repairs to prevent further unnecessary resultant damage and to keep the property at its required standard
The Body Corporate is responsible in most cases to place insurance to protect the building structure and associated common property while the owner is responsible for insuring contents and liability within their lot.
The difference in insurance and maintenance responsibilities can often be confusing due to the cross over between the Body Corporate policy insuring the building which includes fixtures such as kitchen bench tops and internal walls which the owner is responsible to maintain. Likewise, the owner will be responsible for maintaining a sliding door leading onto a balcony as it is within the lot boundary however as the door is deemed to be part of the building structure for insurance purposes, the Body Corporate policy insures this element.
When it comes time to pay the policy excess, if the insurable event only affects one lot owner then the body corporate can impose any excess onto that lot owner, regardless of the cause of the insured damage. If an insurable event affects more than one lot owner then the body corporate is responsible for the policy excess. It is also the responsibility of the Body Corporate to engage contractors to complete insurance repairs for the property it is responsible to maintain and the owner in instances of property they are responsible, regardless of the policy held in the name of the Body Corporate. This is also for practicality reasons as the Body Corporate may not have access to the lot to allow entry, supervision or inspection upon completion of work performed within the lot.
Below we have provided tips on how to identify who is responsible for insurance repairs:
•Check your survey plan to determine the lot boundary
•Determine who is responsible to place insurance for the area – Body Corporate or Owners Contents
•Determine who is responsible to maintain the area – Body Corporate or Owner
•Responsible person to lodge claim with appropriate policy
•Excess to be paid by the either the Body Corporate or Owner depending on who the insurable damage has affected
•Repairs to be arranged by the either the Body Corporate or Owner also depending on maintenance responsibility
•Act quickly to reduce the likelihood of further damage occurring or delays with claim approval
This article was contributed by Grant Mifsud – Partner, Archers the Strata Professionals