Insurance and Storm Season
24th November 2020
By Office of Commissioner for Body Corporate Qld
It’s that time of year again when Queensland experiences more severe storms than the other Australian states. It is always important for community titles schemes to be prepared for storm season. These storms often cause significant loss, damage and inconvenience to many people.
Below are some frequently asked questions that my Information and Community Education Unit answers in relation to insurance and storm damage.
Please note that the following information provides a general guide only and does not purport to cover all issues that may arise regarding community titles schemes and storms. The body corporate legislation, and how it applies in different circumstances, can be complex. The following information does not constitute legal advice. You are encouraged to obtain independent legal advice if you are unsure of how the body corporate legislation applies to your situation.
Is storm damage covered by insurance?
The body corporate is required to hold property insurance. However, many insurance policies exclude cover for certain types of damage, such as damage caused by flooding. The insurance policy may also require the body corporate to take steps to minimise any damage.
Steps you should consider include:
- locating the relevant policy for your scheme and lot—you may wish to contact the body corporate, on-site manager or body corporate manager (if applicable) for details of your community titles scheme insurances
- checking the policy for the extent of its coverage
- contacting your insurer or broker to discuss any damage and the process for lodging a claim
- documenting damage, for example, by taking photos or video
- cleaning up after the storm (where safe to do so) to minimise the extent of the damage.
Who will pay when insurance does not cover damage?
Bodies corporate and owners will need to cover the costs of restoring the scheme to a good and structurally sound condition if the damage is not covered by insurance. In general, lot owners will need to individually cover the costs of fixing their own lot. Owners will also need to contribute, according to their lot entitlements, for the costs incurred by the body corporate in fixing areas for which the body corporate is legally responsible.
Significant differences in the extent of body corporate responsibilities occur depending on whether the scheme is registered under a standard format plan/group titles plan or a building format plan/building unit plan.
For schemes registered under a building format plan (or building unit plan) of subdivision, the body corporate will usually be responsible for the exterior of the building and for all doors and windows in those external walls. It is also responsible for any roofing structures providing protection. However, for schemes registered under a standard format plan (or group titles plan) the lot owner is generally responsible for the outside of the building within their lot boundary, including exterior walls, doors, windows and the roof. You can find out which plan of subdivision applies to your scheme by contacting the body corporate or the Queensland Titles Registry.
What if the building is no longer structurally sound?
If determined to be structurally unsound, buildings located within the boundaries of lots that are registered under a standard format plan of subdivision will normally be the individual responsibility of owners, for that part of the building that is within the boundary of their lot.
Any common walls will be the responsibility of both adjoining owners.
For schemes registered under a building format plan of subdivision, the body corporate is likely to be responsible for maintaining the foundations, roof, and load bearing walls in a structurally sound condition.
What if the scheme is so badly damaged it needs to be redeveloped or terminated?
All owners may enter into an agreement to allow for a scheme to be terminated or redeveloped. If one or more owners express a reasonable preference in favour of rebuilding rather than terminating the scheme, then all owners must proceed to rebuild the scheme. However, an application may be made to the District Court for a determination that the circumstances are just and equitable to terminate the scheme, despite the objections of some owners.
What if I can’t pay the costs of fixing the building?
Any owners who cannot afford to fix their own lots and contribute to the costs of the body corporate fixing common property are obviously in a very difficult situation. This is especially so if these owners cannot sell their lot at a price that covers the amount they have borrowed to purchase the lot.
However, owners should consider the consequences if they are ultimately unable to meet their share of the repair costs. Lot owners may be liable for additional penalties and costs if they do not pay body corporate contributions when due.
Liabilities could also arise if the failure to undertake repairs contributes to further damage suffered by others.
Can fixing the damage be delayed?
Some bodies corporate may face difficulties in obtaining qualified tradespersons to perform repairs after significant storm or flood events. It may be prudent for individual owners to take an active interest in assisting their body corporate to fix any damage as soon as possible. They can then avoid having to contribute to damages payments to others who suffer loss as a result of unreasonable delay by the body corporate.
Individual owners also have similar responsibilities in respect of their own units. Therefore, an owner would be prudent to consider whether delays in fixing their own unit will result in someone else suffering loss or damage.
What if I am suffering loss because owners are not fixing the scheme?
Individual owners and the body corporate have statutory maintenance duties for the scheme. If you believe you are suffering loss because these statutory duties are not being complied with, then in the first instance you should contact the responsible owner, or the body corporate committee members if your issue relates to common property, to discuss your concerns and what action is required. There are also likely to be some steps that you can take to minimise your loss.
If you are unable to resolve your concerns with the relevant owner or the body corporate committee, you may wish to lodge a conciliation application with the Body Corporate and Community Management (BCCM) office. You may also wish to seek independent legal advice.
What if the committee wants to engage tradespersons to perform urgent work but the cost of this work is above the committee spending limit?
If urgent work is required that is going to cost more than the committee spending limit, and there is insufficient time to call a general meeting to authorise the spending, then an application for adjudication can be lodged with the BCCM office, seeking authorisation for the body corporate to incur emergency expenditure. A copy of a resolution confirming that the majority of committee members support making the application needs to be attached to this application. Ideally, at least two written quotations should also be attached.
The BCCM office deals with emergency expenditure applications on an urgent basis.
What if the body corporate needs to perform maintenance work but the majority of owners vote against the body corporate performing this work?
If owners vote against the body corporate performing work that you consider to be necessary, then you may wish to lodge an application with the BCCM office seeking orders requiring the body corporate to perform the work. Minutes of the meeting showing that owners voted against performing the work will need to be attached. You will also need to provide a detailed description of how you have attempted to resolve the issue with the body corporate prior to lodging your application.