Strata Insurance in Australia provides cover not only for common property but also for items owned by unit owners. Each state’s strata legislation defines a minimum of what is to be covered and all policies on the market will include this and then some.
Some unit owner items that are covered include kitchens, bathrooms, internal doors and walls, built-in cupboards, shelving and essentially anything else within a unit that is permanently attached to the structure. Some exclusions do apply however.
If you have owned in strata long enough to have a claim, you will likely have heard the line that all claims need to go through the Strata Manager. You may have even heard this when you phoned the Insurer. While this may at times be an easier process, there are occasions where a unit owner may want to deal with the insurer directly. Perhaps the Strata Manager is slow to respond, disagrees as to whether a valid claim exists or just plain doesn’t want to lodge the claim. The question then arises; can a unit owner claim directly from the insurer?
In short, yes!
Whilst a unit owner is not a party to the insurance contract between the Owners Corporation and Insurer, they are a Third Party Beneficiary as defined in Section 48 of the Insurance Contracts Act.
So what rights does a Third Party Beneficiary have? Essentially the same as the Owners Corporation. The Unit Owner can make a claim directly on the Insurer for their loss and the Insurer is obliged to respond to that claim, including making payments directly to the Unit Owner. The Owner also has the right to raise a complaint and dispute a decision that the Insurer has made.
In the vast majority of situations where the Strata Manager is doing their job properly, it’s usually quicker and easier to have the them lodge the claim. Some reasons for this include:
1. The SM will know exactly what information the insurer will want, leading to quick payment
2. The Insurer will already have the SM’s account details which speeds up things
3. If multiple units have been affected by the damage, having one point of contact could make communication easier
4. If the Owners Corporation is liable to pay the excess, deduction can be made from the claim settlement, making things easier
All in all, if communication with the Strata Manager is smooth, it can be a quicker and easier process for the Strata Manager to control the lodging of any insurance claims.
If however, a unit owner is running into trouble in having the Strata Manager do this, they are well within their rights and have a legal entitlement to make a claim directly on the Insurer. After all, it is their property that has been damaged and they, through their levies, have paid for the policy.
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