Tips on Strata Insurance Claims
In any insurance relationship, claims are the real ‘moments of truth.’ Strata claims can be complex and experience counts.
Who can make a claim?
All strata corporations, regardless of size, must obtain property and liability insurance as specified by the Strata Property Act. The Strata Property Act requires that a strata corporation must ensure the building 100%, including the common properties and the inside of a strata lot. However, the insured is the Owners, Strata Plan xxxx, not the strata corporation. That is to say, any owner can make a claim. Strata insurance claim does not require the strata council’s approval. That is to say, a strata corporation or a strata council cannot block any claim.
The Strata Council’s Role for a strata insurance claim
Although the strata council or the strata corporation cannot block a claim, the insurer or its broker may usually notify the strata before officially open a claim file. The strata has an option not to open the claim file, but they will pay any amounts above the deductible.
Strata Insurance Deductible
An incident may be caused by the strata responsibility or the owner responsibility. The deductible will be paid by strata or a strata lot who was responsible for the incident. The strata will charge back the deductible to the strata lot in question.
What the Strata Insurance will Cover
The Strata Insurance would cover an unexpected and sudden incident. The insurance will cover the resultant damages. For example, if a pipe burst studently and unexpectedly, it was an incident and should be covered by the strata insurance; if the pipe burst resulted in drywall and floor damages, the drywall and floor will be covered by the insurance, but not pipe repairs (not resultant damages). If a pipe drips slowly, but you ignore it, causing damages to the floor – this might not be covered by the insurance as it was not a sudden and unexpected incident.
Insurance Bylaws
A strata should have a lawyer to review its insurance bylaws and remove the wording like “negligence” or “omission” as it would be hard to prove negligence. Instead, it should use the wording “responsibility”. This will ensure that no confusion will be caused. Most important, the strata Bylaws must include the Indemnification Bylaws to protect all owners’ interest. An experienced Strata Manager will guide you these matters.
How to Make a Claim Wisely
Do not make a claim unless you know the loss level and it is worthwhile to make a claim. When an incident occurred, call the insurance broker to request taking a note of an incident. A note will be valid for one year. A strata may come back within a year to file a claim officially. Remember that once a claim is made, the insurer will appoint a adjuster and the insurer must pay the adjuster. The claim will become part of your claim history and it will go with your insurance record for at least 5 year even if you withdrew the claim immediately. Once you know the loss level, it is not worth to have small amounts of coverage. Instead, the strata may have an option to cover the amounts above the deductible.
Insurance Deductible
The Act requires a strata corporation to insure the building 100% including the inside of a strata lot. This may cause confusion that the strata should be responsible for repairing the inside of a strata lot. Per the Act, a strata is responsible for the common and limited common properties only. It is the insurer’s responsibility to repair the inside of a strata lot subject to coverage by the insurer(s). If the total amount is below the deductible, a strata has no authority to repair the inside of a strata lot. This is one of the most common occurrences when someone’s toilet or tub overflows. Owners should determine if their home owner policy covers repairs to their strata lot in the event a strata claim is below the deductible amount. Whenever there is water escape of either clean water from a broken pipe or grey water from a tub or toilet, immediately activate restoration services and call the insurance company.
Strata Responsibility for the Inside of a Strata Lot
Although a strata has no authority to repair the inside of a strata lot, a strata is responsible for the following: (1) The Strata must insure the whole building including the inside of a strata lot. (2) when an incident occurred, it mist prevent the loss from going worse. This responsibility will require a strata to dispatch a restoration company immediately to do emergency, which is restricted to (A) drying the wet and (B) assessing the loss. A strata should not go further.