Was your case a situation where the SM or OC initiated proceedings? In my case the OC defended an action and the strata policy covers defence, subject to the insurer’s belief that the OC has a “reasonable chance of success”.
Owners instigated the NCAT action, SM applied to the insurance company for legal defence coverage, not sure if the OC even knew, the insurer was not confident to so delayed approving the claim until after the NCAT proceedings were finalised and then declined the claim.
Case of the insurer smelling a rat and holding off long enough for it to appear I suspect. Didn’t affect me as an applicant but would have sucked to be one of the uniformed owners that got stuck with almost $80k in fees by way of special levy.