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Tips on Strata Insurance Claims

Insurance! Important tips for the insurance claim – you must know. 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 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 party is the Owners, Strata Plan xxxx, not the strata corporation. This means that any owner can make a claim. A strata insurance claim does not require the strata council’s approval. In other words, 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 opening a claim file. The strata has the 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 strata responsibility or owner responsibility. The deductible will be paid by the strata or the strata lot that was responsible for the incident. The strata will charge back the deductible to the strata lot in question.

What Strata Insurance Covers

Strata Insurance covers unexpected and sudden incidents, as well as the resulting damages. For example, if a pipe bursts suddenly causing damages to drywall and floors, the insurance will cover the repairs for those damages, but not the pipe repairs themselves. However, if a pipe slowly drips and causes damage due to negligence, it may not be covered by the insurance as it was not a sudden incident.


Insurance Bylaws


It is important for a strata to have a lawyer review its insurance bylaws and remove any wording like “negligence” or “omission” as proving negligence can be difficult. Instead, using the term “responsibility” can help avoid confusion. Additionally, including indemnification bylaws in the strata bylaws is crucial to protect all owners interests. An experienced Strata Manager can provide guidance on these matters.


How to Make a Claim Wisely


Before making a claim, ensure that the loss level is known and worth claiming. Contact the insurance broker immediately after an incident to have it noted, which will be valid for one year. Within that year, a strata can file an official claim. Keep in mind that once a claim is made, an adjuster will be appointed by the insurer and the insurer and the claim will become a part of your claim history for at least five years. Considering covering amounts above the deductible instead of small amounts to avoid affecting your insurance record.


Insurance Deductible


The Act mandates that a strata corporation insure the building 100% including the inside of a strata lot. However. a strata is only responsible for the common and limited common properties, not the inside of a strata lot. It is the insurer’s responsibility to repair the inside of a strata lot, subject to coverage. If the total amount is below the deductible, the strata cannot repair the inside of a strata lot. This often occurs when there is water escape, and owners should check if their homeowner policy covers repairs in such cases.


What Strata Insurance Covers


Strata Insurance covers unexpected and sudden incident as well as the resulting damages. For instance, if a pipe bursts suddenly, causing damages to drywall and floors, the insurance will cover the repairs for those damages, but not the pipe repairs. However, if a pipe slowly drips and causes damages due to negligence, it may not be covered by the insurance as it was not a sudden 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 extent of the loss and it is worth it to do so. When an incident occurs, contact the insurance broker to report the incident. This report will be valid for one year, allowing the strata to officially file a claim within that time frame. Keep in mind that once a claim is filed, the insurer will assign an adjuster and the insurer must pay the adjuster. The claim will then become a part of your claim history, remaining on your insurance record for at least 5 years even if you withdraw the claim immediately. Once you understand the extent of the loss, it may not be worth it to claim small amounts of coverage. In this case, the strata may have an option to cover amounts above the deductible.


Insurance Deductible


The Act mandates that a strata corporation must insure the building 100% including the inside of a strata lot. This can lead to confusion, as it may seem like the strata should be responsible for repairing the inside of a strata lot. According to the Act, the strata is only responsible for the common and limited common properties. It is the insurers responsibility to repair the inside of a strata lot, providing it is covered by the insurer(s). If the total amount is below the deductible, the strata does not have the authority to repair the inside of a strata lot. This often occurs when there is water damager from a toilet or tub overflows. Owners should check if their home owner policy covers repairs to their strata lot in case a strata claim falls below the deductible amount. In the event of water damage, whether from a broken pipe or overflowing tub or toilet, it is crucial to immediately activate restoration services and contact the insurance company.


Strata Responsibility for the Inside of a Strata Lot


Although a strata cannot repair the inside of a strata lot, it is responsible for insuring the entire building, including the inside of a strata lot. In the event of an incident, the strata must prevent further loss by promptly dispatch a restoration company to handle emergency measures such as drying and loss assessment. The strata should not proceed beyond these initial steps.

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