Who Pays for Water Damage – The Strata Insurance Policy or the Unit Owners?
When there is damage caused by water within a Strata complex, many ask the question “whose responsibility is it to repair the damage from the water?” The above has been a lively topic of discussion with Strata Councils, Claims Adjusters, Brokers, Lawyers and the Courts. At face value, if there is a loss or damage to common property by the peril of water, the Strata Corporation will be responsible to mitigate and repair any damage, as well as any resultant damage the water caused.
If water caused damage within one or more of the strata lots and/or to the common property and the amount of the loss exceeds the Strata’s insurance deductible, a claim against the Strata Insurance policy can be made. Once the claim is placed under the Strata Insurance Policy an adjuster will be called to deal with the loss and can pay for repairs within the strata lot, so long as they are not deemed betterments and improvements. In the event that a strata lots unit was upgraded after the developer released the project, the unit owner would need to place a claim under their personal lines policy for the cost of the repairs or replacement to the unit improvements or betterments.
Anytime there is a claim that exceeds the deductible of the Strata Insurance policy, the council and property manager need to make a business decision whether or not they should claim it under the policy or allocate it to all strata lots by way of a special assessment. The issue with claiming losses under a Strata Insurance policy is any claim will affect the premium for next year’s renewal. It may also make an underwriter increase the deductibles under your policy to avoid paying any water loss that does not meet a certain threshold. It is always best to ask your insurance agent when or if you should place in a claim and if elected to do so what issues could come in the following policy renewal.
Check out our Resource Centre for more helpful advice.