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Who pays for damaged balustrade?
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SirLunchalot
NSW
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06/02/2018 - 8:34 am
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A lot owner has outdoor furniture that during a storm slams the balustrade and damages several of the aluminium balusters and breaks a glass panel. He advised the EC and asked if it could be repaierd, they said that as it was caused by his furniture he would have to pay for it. He argued that it should be covered by our insurance. They refused that but have come to a resolution (at the last EC Meeting) that they would pay 50% and he would pay 50%.

What is right here? Should accidental damage be covered by our $50K insurance policy or not? Who pays the excess?

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Austman
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06/02/2018 - 10:53 am
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An OC has an obligation to repair common property.

I would have thought the damage would be covered by the OC’s building insurance.

Even if the damage was due to an owner’s negligence, I believe the owner has a right to request a claim on the OC’s building insurance. An owner, being part of the OC, has contributed to the insurance policy and should be automatically covered.  It’s different for a tenant who is not automatically covered.

If the EC refuses to claim, the owner could try claiming directly.

As for excesses, it’s usually the claiming party that has to pay them.  Generally the OC claims for common property damage while owners claim for lot property damage.

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Flame Tree
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06/02/2018 - 12:26 pm
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I agree. Why should you? You pay insurance for these things. If they are genuine accidents these claims should be covered, and if they were malicious you would still be covered but the B’Corp might then seek recompense from the damaging folk – assuming you can legitimately identify them. Refer to the Act or such to help your argument as I’m sure it would say as much in that.

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M S
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06/02/2018 - 3:50 pm
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My only thought is to ask if the furniture is private furniture placed on common property. If it is, has OC permission been given for that, and if so, under what conditions?

I recall a similar Flat Chat question where someone’s car damaged common property. The OC wanted to pay for it. Eventually it was claimed on OC insurance, but the insurer then claimed against the car owner (a resident) who caused the damage. (Sorry can’t remember the reference or the full context).

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scotlandx
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06/02/2018 - 9:33 pm
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Sure claim on the OC insurance, but tell the owner he will have to remove the furniture or place it in such a way that it doesn’t happen again because if it does, the insurer won’t pay.

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SirLunchalot
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07/02/2018 - 5:41 am
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Thanks everyone for your replies. M S I recall seeing somewhere that we can have patio furniture on the balconies, that should cover the sneaky ins. co. from coming back at the owner.

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JimmyT
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07/02/2018 - 8:54 am
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The owner has to take some responsibility if the furniture was inappropriate for the conditions in your block. A beach umbrella on a balcony subject to high winds would, for instance, have contributed to the damage.

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JimmyT
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07/02/2018 - 10:05 am
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Austman said
I would have thought the damage would be covered by the OC’s building insurance.

Different insurers have different policies but yes, that would normally be the case. However, there may be an excess and the strata committee would have to decide who paid that.

Even if the damage was due to an owner’s negligence, I believe the owner has a right to request a claim on the OC’s building insurance.

Only the holder of the policy can claim and that’s the owners corporation. Building insurance doesn’t cover private property unless that property is damaged by defective common property and a claim is made against the OC (and even then …).  If the damage was caused by the owner’s negligence, the OC might claim against the lot owner for the amount of any excess.

An owner, being part of the OC, has contributed to the insurance policy and should be automatically covered.  It’s different for a tenant who is not automatically covered.

Most building insurances don’t cover individuals, whether they are owners or tenants.  Strata insurance covers the whole block for damage to or by common property (e.g. if balustrade glass falls and injures a passing pedestrian). 

Home and contents insurance covers the individual owner’s lot and its contents. Landlord insurance covers the landlord for damage to their property (and, depending on the policy, damage to common property) by tenants.

Strata insurance is all about common property, plant and equipment and any private property that is under the care and control of the owners corp.

If the EC refuses to claim, the owner could try claiming directly.

Any claim would have to be against the Owners Corp (who might then claim against the insurer). The insurer probably would not entertain a claim from an individual owner. 

As for excesses, it’s usually the claiming party that has to pay them.  Generally the OC claims for common property damage while owners claim for lot property damage.  

Correct – but these are different issues.  In NSW the ‘Who’s responsible …” document states that, for instance, in the case of a burst pipe in a common property wall damaging the contents of a unit, the OC is only responsible for the damage caused in repairing the defect, not in the damage to personal property caused by the defect.  That would have to be covered by home and contents insurance.

FYI: Our sponsors CHU offer a discount on Home and Contents premiums if your strata insurance is with them. 

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Austman
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07/02/2018 - 2:40 pm
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Actually, compulsory strata building insurance usually covers all the building(s).

That’s common property building structures but also private lot property building structures.  It also often covers lot fixtures and improvements.  Sometimes it’s legislated that way (eg NSW, VIC, ACT) but with all my OC’s policies (they are all CHU) it’s actually written that way or in the case of lot fixtures and improvements, offered as an optional policy.   CHU’s residential strata policy does however only cover common contents.

Try taking out any type of building insurance if you are a lot owner in a strata apartment building.  Insurance companies will only offer you contents insurance.  That contents insurance might cover damage to buildings if you are found to be legally liable for that damage and do not have another insurance policy that covers it.

I know of individual owners, myself included, who have by-passed the strata committee when making strata building insurance claims. The strata manager/insurance broker/insurance company themselves decided if the claim was acceptable and valid. Those claims have been for both common property (usually inside a lot) and for lot property.   CHU now even allows lot owners to directly make such a claim on-line: Make a claim for strata

I have just now re-confirmed this with CHU. They allow lot owners make strata building insurance claims directly.  Owners are part of the OC and are automatically covered.  It’s for this reason that owners can’t be pursed by the OC’s insurance company to recover damage caused by negligence payouts the way that tenants can be.  Of course this is not a guarantee that the claim will be accepted.   But I’ve had payouts when done this way.

In the OP’s situation, I would think the damaged property will probably be common property. And if so, the OC has to repair it.  Assuming the repair costs are worth claiming (the cost is more than the excess), the OC has the option of claiming those repair costs on its building insurance.  If instead the repair costs were passed to the lot owner, the lot owner could try claiming them directly.

I think excess should be the only deciding matter.

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Cosmo
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07/02/2018 - 4:55 pm
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My two cents worth.  There are two ways the OC can move this forward both involve the OC making a claim.

1.  Just make a claim and see what the insurance company does.  The insurance company may ask for further information via a formal statement.  This would need to be supplied by the relevant owner.

2. The OC can get a statement from the owner as to how the damage was caused.  This can then be submitted with any claim.

If the insurance company decides to pay they can decide if they have grounds to pursue action to recover the amount from the relevant owner.  In legal terms the insurance company “stands in the shoes” of the OC and are allowed to do this.  

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JimmyT
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07/02/2018 - 5:09 pm
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Austman said
Actually, compulsory strata building insurance usually covers all the building(s). That’s common property building structures but also private lot property building structures.  It also often covers lot fixtures and improvements.  Sometimes it’s legislated that way (eg NSW, VIC, ACT) but with all my OC’s policies (they are all CHU) it’s actually written that way or in the case of lot fixtures and improvements, offered as an optional policy. CHU’s residential strata policy does however only cover common contents.

I don’t dispute any of the above but think we have to be very careful here that we aren’t giving the wrong impression so that people think they are covered by insurance when in fact they aren’t.

Compulsory strata insurance “covers all the buildings” means, basically,  common property and all thatentails.

‘… often covers lot fixtures and improvements” means what? Kitchen cupboards? An internal shelf on a wall? An approved extension?  An unapproved extension? Either way, the word “often” should have readers looking at their policies to see what actually is covered.

The fact that lot fixtures and improvements coverage is offered as an add-on suggests that in some policies they aren’t there to begin with. Again, owners should check their policies.

I’m only saying this because too often I’ve come across lot owners who saw the premiums come up every year as part of their strata scheme’s budget and thought they were fully insured – and discovered they weren’t when things went terribly wrong.

If anyone is interested, this is the current CHU residential strata policy.

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Austman
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08/02/2018 - 12:34 pm
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JimmyT said  Compulsory strata insurance “covers all the buildings” means, basically,  common property and all that entails.

I think it’s more accurate to say that compulsory strata building insurance covers what the legislation says it must cover.  And that varies from state to state and even from strata scheme to strata scheme.   It can cover considerably more than just common property.  It can cover lot owned building structures and other lot property including “owners’ improvements and owners’ fixtures”.

In NSW for example:

161 Requirements for damage policy

(3) Parts of building to be covered
The parts of a building to be covered by a damage policy include the following:
(a) owners’ improvements and owners’ fixtures forming part of the building,

Other states have that requirement too. 

Stratas in VIC and ACT can have entire buildings that are actually lot property, especially in horizontal type stratas.  But even in my Melbourne CBD high rise, I was surprised to discover, on advice from a strata lawyer,  that the upper floor in my 2 floor apartment is actually lot property!   It’s all still covered by compulsory strata building insurance because the strata act in VIC states that it must be.   In the ACT, class B units (horizontal type stratas) can be exempted from compulsory strata building insurance if voted that way at every AGM.

JimmyT said  ‘… often covers lot fixtures and improvements” means what? Kitchen cupboards? An internal shelf on a wall? An approved extension?  An unapproved extension? Either way, the word “often” should have readers looking at their policies to see what actually is covered.

They should be looking in the legislation too.  Because if that cover is compulsory there’s no ‘often’ in that case.  That cover must be included in compulsory strata building insurance in ACT, NSW, VIC and probably other states too.   But it would be optional in the cases where compulsory strata building insurance was not required.

It seems in the OP’s case, there is building insurance cover for the damage but the committee doesn’t want to claim on it.

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fugazi
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21/02/2018 - 5:53 am
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Austman said

JimmyT said  Compulsory strata insurance “covers all the buildings” means, basically,  common property and all that entails.

I think it’s more accurate to say that compulsory strata building insurance covers what the legislation says it must cover.  And that varies from state to state and even from strata scheme to strata scheme.   It can cover considerably more than just common property.  It can cover lot owned building structures and other lot property including Taringa Property Management “owners’ improvements and owners’ fixtures”.

In NSW for example: 

161 Requirements for damage policy

(3) Parts of building to be covered
The parts of a building to be covered by a damage policy include the following:
(a) owners’ improvements and owners’ fixtures forming part of the building,

Other states have that requirement too. 

Stratas in VIC and ACT can have entire buildings that are actually lot property, especially in horizontal type stratas.  But even in my Melbourne CBD high rise, I was surprised to discover, on advice from a strata lawyer,  that the upper floor in my 2 floor apartment is actually lot property!   It’s all still covered by compulsory strata building insurance because the strata act in VIC states that it must be.   In the ACT, class B units (horizontal type stratas) can be exempted from compulsory strata building insurance if voted that way at every AGM.

JimmyT said  ‘… often covers lot fixtures and improvements” means what? Kitchen cupboards? An internal shelf on a wall? An approved extension?  An unapproved extension? Either way, the word “often” should have readers looking at their policies to see what actually is covered.

They should be looking in the legislation too.  Because if that cover is compulsory there’s no ‘often’ in that case.  That cover must be included in compulsory strata building insurance in ACT, NSW, VIC and probably other states too.   But it would be optional in the cases where compulsory strata building insurance was not required.

It seems in the OP’s case, there is building insurance cover for the damage but the committee doesn’t want to claim on it.  

I belive that insurance company should pay whole sum of the damage. Am I wrong?

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