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I DIDN’T REALISE THAT MY STRATA UNIT WAS ALREADY INSURED!

In Victoria when you purchased your unit you will have received an Owners Corporation Certificate in your Section 32 documentation. This provides all the current insurance details. If the owners corporation (or body corporate in the old language) is not professionally managed you should certainly enquire as to the status of insurance.
Unfortunately, all too often owners purchase their unit and immediately take out building insurance, only to discover that their unit is already comprehensively insured. Not only have they spent money unnecessarily, but have created a potentially dangerous ‘double-insurance’ situation.
The Owners Corporations Act (2006) requires that your strata takes out specialist strata insurance on all the buildings on the Plan of Subdivision. This insurance automatically includes a minimum of $20 million of Public Liability insurance over the common property, which includes the driveway (s).
This comprehensive insurance policy taken out with one specialist insurer ensures the safest and the most cost-effective insurance option. You should be aware that there are some obvious risks if duplicate insurance policies exist.

  • The potential for these insurance companies to dispute which company is liable, holding up repairs for a lengthy period.
  • The specialist policy will have replacement cover whilst the second policy may simply offer a payout, resulting in that owner having to arrange their own re-building.
  • A range of scenarios which can affect two units with a common wall where conflicting insurance policies result in dispute and difficulty.
  • Such scenarios are entirely unsatisfactory if the buildings are connected by common property, resulting in the buildings not being rebuilt at the same time, and disputes about who pays for the adjoining walls and services.
All of the above depend on the buildings being adequately insured. If any of the joined buildings are under-insured then the owners may not get their full pay out, meaning they can’t afford to rebuild.
If in doubt, you should contract a strata specialist for advice.
 

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THE COMMITTEE WON’T DO ANYTHING ABOUT MY NEIGHBOURS CAR

Strata communities generally have either a formal committee, or at least a group of active residents who take on the task of resolving problems that invariably occur in their Owners Corporation. If the strata complex does not have an experienced strata specialist in place, problems can arise if the owners’ committee can not (or will not) agree to deal effectively with such problems.
Unfortunately it is a fact of life that complaints can occur, and managers and committees must have policies and procedures in place to manage and resolve such complaints and disputes.
Disputes within an Owners Corporation are far more common than many people realise. Complaints occur for a number of reasons, most generally involving vehicle parking and noise, however it is impossible to predict the issues that can arise and cause problems. And when nobody is prepared to act to resolve the problem… it generally escalates. This is where the experience and skills of a strata specialist can be invaluable in calming the situation and ensuring that the needs of all residents are heard and communicated .
A strata specialist will initially recommend that basic communication is common sense. Sometimes residents who fail to obey the rules sometimes simply do not know the rules. As a starting point, your committee should ensure that all lot owners and tenants are provided a copy of the Owners Corporation rules. As a follow-up, the committee should encourage neighbours to talk about their concerns to resolve disputes.
If this strategy fails, then the strata specialist will know how to take communication to the next step, which can be arranging for mediation or conciliation, made in good faith by all parties, or if all else fails, applying to VCAT to make a legally binding decision about how the dispute is to be settled.
 

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QA No Common property


24 Aug 2022

Question: Although we have an Owners Corporation, we have no common property. How does insurance work? Do we need individual strata insurance? Should Public Liability be part of this?

I live in a home that is made up of 3 houses. It was originally a subdivision. The builder set up the Owners Corporation. There is NO common property at all, no common driveway, nothing. None of us are the original owners, so started looking into individual strata insurance.

It seems this can’t be done – well, at least not without a lot of expense. We have no meetings or anything as there is really nothing to discuss. We all pay for any/all maintenance for our own houses (which are houses, not joined units). We only need to come together once a year to pay for our portion of the building insurance.

We just noticed that there is a $10,000,000 public liability insurance added on to our policy. The conveyancer we just consulted about possibly cancelling the Owners Corporation told us that, as we have no common property, any public liability claim would be against us individually, not the body corporate. If there was a claim they would refuse to pay it as it wouldn’t have occurred on common property.

Hence I asked our broker to remove this from the policy. She told me that it is compulsory and can’t be removed. Is this correct? It doesn’t seem right to me that you have to pay insurance for something you could never claim on.

Answer: As this property is an Owners Corporation, it must comply with the regulations set out in the Owners Corporation Act 2006

As this property is an Owners Corporation, it must comply with the regulations set out in the Owners Corporation Act 2006.

To answer the question we have quoted the relevant expert from the Act. Under the Owner’s Corporation Act of 2006 it states the following:-

OWNERS CORPORATIONS ACT 2006 – SECT 60

Public liability insurance
1.      An owners corporation must take out public liability insurance for the common property in accordance with this section.
2.      The public liability insurance required under subsection (1) is insurance for any liability of the owners corporation to pay compensation in respect of—
a.      any bodily injury to or death or illness of a person; and
b.      any damage to or loss of property—
which is sustained as a result of an occurrence or happening in connection with the common property.
3.      The owners corporation must ensure that, in the insurance which the owners corporation has under subsection (2), the limit of liability is a minimum of $10 000 000, or if another amount is prescribed, that other amount, in any one claim and in the aggregate during any one period of insurance.
If owners require further clarification or have any questions about individual strata insurance, we suggest contacting Consumer affairs.

Whitbread Insurance Brokers