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Insurance Claims

Question: If a lot owner makes an insurance claim that affects the premium and that lot owner pays a higher portion, what happens when the lot owner leaves? Does the higher premium fall to the next owner of the lot?

Answer: My instinct would be that the purchaser doesn’t inherit that.

That is a spectacularly good question that legislature didn’t think over, nor did I.
Excesses relate to a specific claim. So if they’re sort of ‘one offs’, whereas premiums, once they’re increased, probably stay increased.

My instinct would be that the purchaser doesn’t inherit that. For liability to run with a lot and to survive transfers, you need the express statement, I think, to that effect, whereas the language of the section we looked at talks about a lot owner causing that increase. That is an individual person, it doesn’t talk about a lot owner or its successes in title. So it seems to me that what it really implies is that a lot owner, so long as they are, and probably by that definition, they have to be a lot owner for the section to apply to them. If they’re no longer a lot owner. They don’t. I don’t think the purchaser inherits liability, because the section doesn’t say so and the section does seem to put it on the specific person that caused it.

This is a fantastic question. I think where you end up is, that lot owner as the burden of the increase for the currency of their ownership, but upon disposition of the lot, the excess doesn’t change, but the OC picks it up. I think that has to be the answer based on what’s written but it was obviously not something that was considered discreetly.

Tim Graham
Bugden Allen Graham Lawyers

 

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Hose Water Damage


20 Sep 2022

A strata manager or owners' worst nightmare: a phone call from the tenant who says a flexible braided water hose under the sink has burst and there is water going everywhere.

It can mean some 1,500 litres of water per hour flowing through the property.

This is a growing issue as many property owners are unaware their "flexi hoses" are reaching their end of their lifespan and threatening to burst. This is especially prevalent in properties over 15 years old who have had the same flexi hosing in place in that period. It's a case of an accident waiting to happen. The bursting of flexi hoses accounts for over 20%* of household water damage claims in Australia. On average, more than 45% of CHU claims are water damage and failure of flexible braided water hoses significantly contributes to that number. Some hoses can come with a five to 10-year warranty period whilst others have no warranty at all. They can last for 10 years, but insurers are finding more and more claims coming from hoses that have burst long before that. 

In many cases, the hoses fail long before their warranty expires because of incorrect installation. Examples of these issues include over-tightening, over-stretching, kinking and looseness. 

The impact of what may seem to be such a simple burst of a hose is far more reaching than many strata mangers or owners anticipate. They can include: 

  • Mould   
  • Need to move out
  • Damage to owners or tenants contents   
  • Damage to common passageways    
  • Possible damage to units next to or underneath where the flexi hose burst  
  • Potential loss of a good tenant 
  • If an investment property and the burst happens between tenants, inability to lease whilst repairs undertaken and with no lease in place, no cover under the insurance policy.
Here is a useful checklist to help strata owners and managers minimise some of the risks of the flexible braided water hose issue: 
  • Incorporate a flexi hose review into your maintenance program. 
  • Look for bulging, rust spot, fraying or kinking. 
  • Check out the warranty period (expiry date on collar of the hose). 
  • Consider a licensed plumber to install the hose. 
  • Purchase replacement hoses that come with a warranty
Ensuring you have adequate insurance cover can help if this water disaster strikes. Contents or Landlords insurance, such as provided by CHU, covers accidental loss or damage to contents in the unit from events, including the escape of water. 

CHU Insurance

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