Information for Owners and Residents:
Insurance in an Owners Corporation
Many residents in an owners corporation find insurance somewhat confusing and this article is designed to clarify some of the issues.
Building insurance: The Owners Corporation is required to insure the building, This includes the building itself and all built-in items within a Lot. In an unoccupied apartment, this means that everything other than carpets, floating floor boards, window furnishings and plug-in appliances are covered under the policy. Some examples of items that are covered are benches and cupboards, bathroom fittings, air conditioning unit, oven, cooktop and range hood (but not microwave or dishwasher which are not built-in and are considered to be contents).
The policy covers water damage, fire and other accidental damage, but not wear and tear. So damage to your range hood cause by a fire on the cooktop would be covered, but breakdown of the range hood would not be covered.
If there is a water leak and the ceiling and your carpet are damaged, the Owners Corporation insurance will cover the ceiling damage only. Carpet is contents and is not covered by the policy.
Many owners believe that if the leak has come from a source outside their lot, such as from a roof or from an apartment above them, then that is the fault of the party where the leak originated. However, this is generally not the case and the owner needs to demonstrate negligence by that party.
Therefore, we strongly recommend that owners have contents policy (or landlords policy) to cover carpets, floating floor boards, window furnishings and plug-in appliances. Residents (owner occupiers and tenants) should also consider furniture, clothing and other items of personal property they bring into the apartment.
Whilst discussing contents insurance, care needs to be taken to ensure that personal property kept in a storage cage, bike store or the like are covered under the terms of any contents policy.
Public Liability: The Owners Corporation has cover for anything for which it may be held liable. The location of the incident, whether on common property, in a lot or on public land is irrelevant; the test is whether the Owners Corporation is liable. There is no public liability cover for individual owners. Contents and landlords policies generally have a public liability section, which is another reason why such policies are strongly recommended.
Alternate accommodation/Loss of Rent: If your lot is damaged by an incident and is deemed uninhabitable, you will be entitled to claim under this section of the policy. To be “uninhabitable”, the kitchen and/or bathroom must be unusable. If you are an owner occupier, you can claim alternate accommodation costs; if you lease out your apartment, you can claim the loss of rent while the tenant is excused from paying rent. The alternate accommodation for tenants is not covered under the policy.
The building manager or your OC Committee can provide additional explanation on the above but we are unable to provide any personal advice or recommendations. For personal advice, please contact the Insurance company or your insurance broker.