Insurance – What’s Covered and Making a Claim
February 17, 2020
With the recent heavy rainfall and flooding in parts of Queensland, many of us are washed over with memories of the 2011 floods which left thousands of residents with damaged properties, a mammoth clean-up and in dire need of compensation from their insurers. This event stands as a strong reminder of the importance of strata insurance which provides cover specifically pertaining to strata schemes.
It is important to be aware that strata insurance provides cover for common property and the building’s structure. This means that the body corporate is responsible for all common areas and the structural elements of the building. Owners are typically responsible for the internal contents of their unit. If you need to brush up on your strata insurance, we have broken down all there is to know:
Insurance – The Basics
Under the Body Corporate and Community Management Act, the body corporate must insure the common property and the body corporate assets to full replacement value. The insurance policy must cover damage and the costs associated with the reinstatement or replacement of insured buildings. The cover must provide for the reinstatement of the property to its condition when new, this includes demolition costs and professional fees such as surveyors or architects.
Insurance – What Is Covered?
When you own in a body corporate, part of the levies you pay contributes to the insurance policy. Strata insurance will generally cover common or shared property against defined acts. This might include common areas, lifts, pools, car parks, gardens, wiring, balconies, walls, windows, ceilings and floors. Strata insurance must provide liability cover in the event people are injured on common property. A defined act is usually an accidental or malicious event, storm damage or fusion, i.e. motor burn out.
Insurance – What Is Not Covered?
Strata insurance is just like any other form of insurance in that there are restrictions to the policy known as exclusions. Each insurer has different exclusions and policy terms and conditions. It is important you read the policy purchased by your body corporate to understand what is and is not covered in your unit. If you are on the Committee, make sure to understand what is excluded from the policy before selecting cover. The best price may not mean the best policy. Please note that policies are not issued to cover damage resulting from gradual deterioration. Gradual deterioration or wear and tear should be rectified by maintenance.
Does The Body Corporate Insure My Contents?
No. You should make sure you have appropriate contents cover for your belongings and for anything of value that the body corporate insurance does not protect. Strata insurance covers only common or shared property. This may include some of the fixed parts of your unit such as bathroom fixtures, kitchen fixtures and stove top, but will not cover everything. It is important to note that whilst the body corporate insurance may cover these parts of your unit in the event of a defined act, the body corporate is not responsible for the ongoing maintenance of these items. Damage to carpets, floor coverings, removable fixtures and fixed split system air conditioning units within a lot are not recoverable on the body corporate insurance policy. Lot owners should report damage to these items to their contents insurers.
It is important you read the policy purchased by your body corporate to understand what is and is not covered in your unit.
How Can I Claim?
In order to submit a claim, you will need to complete and lodge a claim form including any quotations for the repair or replacement of your lost or damaged property. The claim form in most cases be submitted via the Body Corporate Manager when they have been engaged to manage the Body Corporate insurance, otherwise it must be submitted direct to the broker engaged by the Committee.
The claim is then reviewed for completion of all required details and submitted to the insurer on receipt of the required quotations and/or receipts. If a quotation exceeds $1,000 the body corporate insurer may require a second quote or appoint an assessor.
Who Should Pay the Excess?
For an event effecting only one lot, the lot owner is liable for the excess unless the body corporate decides it is unreasonable in all circumstances for the owner to accept liability. For more details on this topic, please read the previous article contributed by Archers the Strata Professionals here.
This article was contributed by Carly Dudley, Insurance Account Executive at Marsh Advantage Insurance.