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QA Insurance Claim by a Lot Owner

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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Protecting Your Strata Investment: Insurance Cover for the most Common Claims


26 Oct 2023

As a strata property owner, safeguarding your investment is paramount. Understanding the common risks and having comprehensive insurance coverage can provide you with peace of mind. Here's a breakdown of the most frequent types of claims in strata insurance:
 
1. Storm Damage: Australia's unpredictable weather can cause severe damage to roofs, windows, and external structures. Strata insurance covers repairs resulting from storms, hail, and cyclones, ensuring your property is restored to its former glory.
 
2. Water Damage: Burst pipes, leaky roofs, faulty plumbing, or flooding can lead to extensive water damage. Strata insurance covers these damages, including those caused by deteriorating flexi hoses, which often go unnoticed until they fail.
 
3. Glass Breakage: Accidental damage, vandalism, or extreme weather events can shatter windows, doors, or shower screens. Insurance covers the repair or replacement of these glass elements, ensuring your property's security and aesthetics.
 
4. Fire Damage: Fires, whether accidental or intentional, can cause significant harm. Strata insurance covers repairs or replacements due to fire damage, helping you recover without bearing the financial burden.
 
5. Vandalism and Malicious Damage: Acts of vandalism can occur in common areas, car parks, or individual units, leading to broken windows, doors, walls, and locks. Strata Insurance covers the cost of repairs, restoring your property's security and appearance.
 
6. Accidental Damage: Unexpected accidents, such as damaged walls during moving or hot saucepans causing harm to benchtops, are covered under strata insurance. This ensures you are protected from unforeseen events.
 
7. Impact Damage: Strata buildings are vulnerable to damage caused by third-party vehicles colliding with the property. Strata insurance covers repairs, ensuring your property is restored following such incidents.
 
8. Public Liability Claims: If someone is injured or their property is damaged within the strata premises, public liability coverage addresses these claims. This essential protection ensures you are financially secure in case of legal liabilities.

9. Office Bearers Liability Claims: Committee decisions may lead to legal challenges. Office bearers liability coverage protects committee members, covering their legal and defence costs in the event of disputes.
It's crucial for strata property owners, managers, and insurance brokers to review their policies carefully. Each property is unique, and understanding what is covered under the policy, as well as potential additional coverage needs, is essential. Regular maintenance and proactive risk mitigation measures are also key to reducing the likelihood of claims.
By having a comprehensive strata insurance policy in place, you not only protect your investment but also gain confidence and peace of mind, knowing you are prepared for the unexpected. Review your policy, understand your coverage, and secure additional protection if needed. While most policies cover some of these common claims, CHU comprehensive residential strata insurance is recommended along with checking your sum insured and make sure you are adequately covered should the unexpected occur.
When it comes to protecting your strata property, CHU Underwriting Agencies is Australia's leading strata insurance provider and is experienced in handling claims of all sizes and severity.

Article provided by CHU Underwriting Agencies.