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Insurance Co forcing tenant to reimburse for damage to common property
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basjan27
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17/07/2017 - 4:55 pm
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Hi all... a tenant in our small strata block backed into a brick wall on common property. The wall collapsed.  Our managing agent said insurance would pay to repair.  Quote submitted and approved by insurer, and work completed.  Insurer paid the contractor.

Now, insurer has sent letter of demand to tenant to refund insurance company in full.  Managing agent says it's allowed.

I've reviewed our policy and see nothing related to recovering costs.  MA says only recourse is for OC to reimburse the insurance co.

Anyone else have this experience?  We love the tenant, and they cannot afford to pay it and don;t want them to be harassed for an accident.

Thanks,  

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Austman
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17/07/2017 - 8:34 pm
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All the lot owners are covered by the OC/BC's building insurance, so an insurance company cannot recover their costs from them (as they are the policy holders).

But that's not the situation for tenants.  An insurance company can choose to try to recover their costs from a tenant and AFAIK that is outside any OC/BC law.  It's completely up to the insurance company.

If the tenant has contents insurance - that type of insurance usually has a liability cover which should cover the tenant in such circumstances.

It's a reason why it can be wise for tenants to have contents insurance.

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Boronia
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17/07/2017 - 10:09 pm
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Any insurance company will attempt to recover its costs from a third party it may consider responsible for causing damage. They don't willingly just give away money.

In this case the driver/owner of the vehicle involved. Even if it belonged to a member of the SP, the vehicle does not belong to the SP, and I would not put it past the company to reclaim from that owner, or his vehicle insurance.

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JimmyT
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17/07/2017 - 10:29 pm
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This is going to sound a bit harsh but seriously,  a resident who decides to save money by not properly insuring his or her vehicle then expects all his neighbours to cough up their hard-earned to cover their incompetence?

Of course insurers will try to recoup the money - they are not a charity ... and neither is the owners' corp.

If my OC proposed paying a resident's bill for something like this I would drag them all the way to NCAT.

That said, if every owner in the block, without exception, wants to stump up for the car park Fangio, that's a different matter. I applaud your sense of community.

But this is not about the big bad insurance firm persecuting a poor little tenant. If you can't afford insurance, you can't afford a car.  

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Lady Penelope
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17/07/2017 - 11:21 pm
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I agree with JT. I wouldn't recommend that the OC pay for the Tenant's damage to Common Property. Would this be setting a precedent? It will be on the Record as it will need approval at a General Meeting.

What is going to happen next time that a Tenant causes damage - will the OC continue to wear the cost? 

If the Owners like the Tenant and want to help the Tenant then they could each perhaps contribute personally to the Tenant rather than have this be an OC decision. That will avoid any expectation that the OC will continue to pay for future Tenant damages.

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scotlandx
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18/07/2017 - 10:29 am
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It is wonderful that the Owners like the tenant so much they want to pay for damage caused by the tenant, the tenant must be an amazing person.  Perhaps they could set up a crowdfunding page.

As a general principle if you cause damage you are liable for it.  You can insure yourself for the financial liability of certain kinds of damage, that is one of the things that is covered by your vehicle insurance.

The concept of moral hazard is worth thinking about - where another party bears the cost of certain risks, the other party is likely to take more risks, because there are no consequences for that party.  

The matter is one between the tenant who caused the damage and the insurance company, the OC has nothing to do with it.  

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analuk
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18/07/2017 - 10:41 am
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Yes Jimmy and all, it does seem a bit harsh expecting someone who can't afford to pay - but personal responsibility is the over-riding factor here - crowdfunding maybe a solution.

I doubt whether this is a parallel but my father did knocked a wall over whilst driving once - it made him realise he shouldn't be driving any more - and gave it away as a result - it probably gave him, and maybe others a few years more life as a result of vacating the drivers seat at 80yrs. That's the big picture here maybe?!

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Sir Humphrey
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18/07/2017 - 2:34 pm
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My view is that the OC was correct to claimed on its insurance and make sure the common property was repaired promptly. The insurer is now within its rights to recover its cost from the person who caused the damage. 

As suggested above, the person who ran into the wall should have liability cover as part of their car insurance or as part of their home contents insurance. The OC should not be paying to repair the wall. 

It really is a huge risk to drive a car without having at least a 3rd party liability insurance. Your own car might not be worth much but it is still capable of crashing into somebody else's expensive car or wall. 

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Austman
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18/07/2017 - 3:55 pm
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Austman said

If the tenant has contents insurance - that type of insurance usually has a liability cover which should cover the tenant in such circumstances.

It's a reason why it can be wise for tenants to have contents insurance.  

I've checked some of my contents policies. While liability for accidental damage to property (eg OC/BC common property) is covered, accidents when using a vehicle are not.

So a car driving tenant needs both car insurance and contents insurance to be  covered.

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scotlandx
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18/07/2017 - 5:17 pm
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That's right, contents insurance doesn't cover that kind of thing, which is just as well because I don't drive!

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Sir Humphrey
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18/07/2017 - 8:42 pm
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Yes. Agreed re car insurance. My contents insurance covers me for liability if I run into someone on my bicycle, even far from home, but not for anything I might do with a motor vehicle. 

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