Warning over insurance minefield for unit owners

The recent devastation of Tropical Cyclone Alfred across southeast Queensland is an opportune time to revisit the insurance onus of bodies corporate, owners and tenants.

Severe weather events, such as TC Alfred, earthquakes, explosions, lightning and water, are considered ‘insurable events’ that a body corporate’s building insurance must cover.

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Even though all bodies corporate must cover common property for full replacement value, but not areas will have total insurance. Picture: AAP Image/Darren England.

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A body corporate must insure the common property and its assets for full replacement value.

It must also hold public liability coverage for the common property and the relevant assets.

This means not all areas of a lot, even if on occasions where damage has been caused by water ingress, are covered by body corporate insurance.

Therefore, in the case of an insurable event, the building insurance may not cover contents or other fixtures within a lot including, but not limited to.

– temporary wall, floor and ceiling coverings, carpets;

– fixtures that can be removed by a lessee or tenant at the end of a lease or tenancy;

– mobile or fixed airconditioning units for a particular lot;

– curtains, blinds or other internal window coverings;

– mobile dishwashers, clothes dryers or other electrical or gas appliances that are not wired or plumbed in.

BCCM Commissioner Jane Wilson has adjudicated over many body corporate disputes.

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This is why residents of any lot within a community titles scheme should take out their own contents insurance.

In many ways, it’s no different to living in a house that’s not part of a community titles scheme.

It would be an oversight for any resident to believe that the body corporate insurance would cover any damage to their contents for water ingress in a severe weather event.

To put it simply, anything that is usually covered under a house building insurance policy is covered under the body corporate building insurance policy.

But anything that is of a personal nature or is not a permanent fitting or not part of the building’s structure, you should take out your own insurance policy.

Be mindful, that if taking out contents insurance, ensure that the belongings of all parties living in the house are included in the policy.

Damage to Broadwater Keys Holiday Apartments after Tropical Cyclone Alfred. Picture: Alex Treacy

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If a property is rented out the owner and the tenant may need to take out separate contents insurance for different items that they are responsible for.

For example, the owner would have to insure the carpet, blinds and curtains and the tenant their own furniture.

On occasions, a body corporate may be liable for the replacement or repair of contents within a lot, if it can be proved the damage was caused because the body corporate did not fulfil its legal maintenance obligation.

But providing the building has been maintained, there is no fault on the body corporate because of a cyclone.

Palms trees in strong winds and rain near high rise units as a result of ex cyclone Alfred on the Gold Coast. Picture: Lyndon Mechielsen/The Australian

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And finally, residents and lot owners need to be mindful that it’s in the best interests of all lot owners to work with the body corporate when making an insurance claim.

While a resident may be able to directly claim under the body corporate’s insurance policy, for some successful claims, the money is paid to the body corporate as they are the policy holder.

Also, if a claim is needed for multiple lots following a severe weather event, a joint claim may only incur one payable excess and not multiple, depending on the conditions in the policy.

For more information regarding bodies corporate insurance, use this link.

* Jane Wilson is the Queensland Commissioner for Body Corporate and Community Management.

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