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Topic
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I live in a strata managed apartment as an owner occupier.
When I bought the building finances were in the black, 2 years later they are in the red.
The building insurance cost has tripled since I bought in.
The complex includes residential and commercial units.
It has been stated the reason the insurance rise is related mainly to one of the commercial units a pub/strip club. Unfortunately there seems to be no separation between residential and commercial obligations. Lawyers have been engaged and the situation is before a tribunal to resolve this and hope to have the burden of the insurance increase place upon the business that is deemed the greatest risk. Unfortunately this has yet to be resolved as yet awaiting outcome of the tribunal.
An insurance broker sought out insurance coverage and few local companies were willing to cover the risk of our complex. The has led to the offer of an Australian based insurance cover but not the whole and overseas insurance company to cover the rest.
The challenge is I believe that they are not obliged to Australian regulations.
Additionally the complex was obliged to fix any defects before the insurance companies would take on the risk, fair enough.
The complex was built in the 90’s and due to the age of construction some residential units had problems with bathroom waterproofing however the developers were not deemed responsible for fixing the defects. There was a special levy established many years ago that all units would contribute to correct any waterproofing problems and the number of affected units had diminished over time. However the insurance challenges changed this situation. A meeting of owners occupiers agreed to taking a loan to fix the remaining units bathroom waterproofing challenges in the complex in order to meet the insurance requirements.
So with the recent allegations aired in the media about strata management companies I am worried. How worried should I be?
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There are a number of issues here. In the last 3-4 years strata insurance premiums have gone up a lot (more than inflation)
From my experience, where there is commercial activity involved, the insurers see a higher risk and hence higher premiums.
That you are having to go to overseas insurers indicates that the risk , as perceived by the insurers, is quite high (So double whammy)
Unlike the residential strata insurance marker, the commercial strata insurance marker (meaning companies that will carry that insurance is small) the competition is less so the premiums are higher.
Insurers can apply all sorts of conditions before they insure you. Since you done have a lot of insurers to turn to, you just have to comply
(In my commercial block the insurance company wanted us to erect a direction sign outside of a fire exit. Luckily that was cheap but had we not done it we would not have got insurance)
Also I know from my experience that insurance companies are sending out inspectors to commercial buildings and checking general condition and fire services. I’ve never heard of such in a purely residential building.
The legislation allows the OC to on-charge a [lot owner] a higher share of the premiums if the cause the insurance to go up because of the extra risk
But having spoken to an insurance broker (and one that is quite experienced in this type of insurance) I was never able to have explained to me how its determined the extra premium amount.
But having spoken to an insurance broker (and one that is quite experienced in this type of insurance) I was never able to have explained to me how its determined the extra premium amount.
Maybe I’m being naive but I would have thought you’d ask insurers to quote with the strip club included, and then a hypothetical figure if it wasn’t. You might even say there is a plan to change the strip club to a health spa (or something) and ask for a quote on that basis. Or ask a friendly insurance broker to do the sums for you.
It should be well worth the hassle because (as Kaindub says) the law allows you to charge owners higher levies if the activities in their lot result in a higher insurance premium.
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The Section of the NSW section for lots responsible for an insurance premium increase (Section 82) requires their “consent of the owner” when presented with the explanation and cost. If they dispute it then it’s off to NCAT and you’re going to need some evidence to take with you.
We had an insurer come back to us today seeking police checks for a Vape shop in a complex and it looks like their cover will need to go off shore because nobody local wants to touch it.
Tattoo studios are also difficult to insure.
Surely all the evidence that would be required would be a couple of quotes from reputable insurers with the nefarious premises included and matching quotes with them excluded,
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Surely all the evidence that would be required would be a couple of quotes from reputable insurers with the nefarious premises included and matching quotes with them excluded,
I have never ended up at NCAT to know what their burden of evidence is.
In my experience it was a tenant’s activity causing the increase and it was very difficult to get anything from the broker/insurers about specifically who and why there was such an increase.
The OC made a request to the lot owner to cover the increase once sufficient information was gathered and the lot owner refused. They did however evict their tenant and the insurance went back down.