Storm damage or flood damage? The difference may impact your body corporate insurance
While the finer nuances around “storm damage” and “flood damage” are being debated between insurance providers and the body corporate community, property owners are being drowned in repair costs as they battle for insurance claims.
When it comes to insurance, the fine-print and wriggle-room can frustrate anybody on a regular day. However, when your body corporate property has been devastated by water damage and you’re looking at losses worth hundreds of thousands of dollars, finding out if it’s being caused by “storm damage” or “flood damage” and such technicalities would probably be the last thing on your mind.
To insurance companies however, the source of the water causing the damage can decide whether you’re privy to getting your insurance claims paid or not. In Queensland, body corporate properties are being hard hit in the recent spate of bad weather, and there are many grey areas regarding body corporate insurance to cover weather damage.
What’s causing the frustration?
- The fine-print and definitions:
Flooding may or may not have been caused by storms and rainwater runoff. However, owners may at times misread or overlook some of the nuances of the definition of “flood” within the policy which ideally means overflowing groundwater from lakes, rivers, dams, etc.
Also, certain body corporate insurances may not cover flood damage from rainwater runoff, which puts the property owners on the back foot when this kind of damage occurs. Determining the cause of the flood and the nature of resulting damage can at times be tricky, and therefore owners could get locked in long, tedious insurance battles.
- Varied expert reports:
At times the issue is complicated further as various water experts reports don’t agree with each other. Bodies corporate and insurance companies arrange their own hydrologists and technical experts to determine the cause of damage while insurers deep dive into the implications.
Often there is a delay in verifying the details within the hydrologist’s reports. In the meantime, the owner is burdened with hefty bills and the inconvenience of repairing the damage.
What does Queensland’s law say?
Not a lot, at this point. The Body Corporate and Community Management (BCCM) Act does not clarify how body corporate properties can be adequately protected. As per the government, body corporate legislation can be complex and different rules may apply in different property types. Although insurance is part of the rules set out in the regulation modules, the onus lies on property owner to know which regulation module applies to their property and seek insurance protection accordingly.
What can you do to protect your property?
When buying into a body corporate, you should take care to:
- Understand the insurance related rules set out in the regulation modules specific to your property type
- Compare between the different insurers and policies as they can contain different levels of cover, general definitions, general conditions and general exclusions
- Check with your body corporate about the insurance history of the property and request any records from the archives to help you make the right insurance choice
- Get in touch with your body corporate manager and seek additional independent advice from a body corporate insurance specialist to get clarity regarding the content of your preferred insurance policy
- Contact your insurer or broker to check the extent of cover provided and discuss the process for lodging a claim in case damage happens in the future
- In case your property has suffered weather damage, document the details and retain evidence in the form of photos, videos, emails and other conversation records damage before you begin cleaning up after the storm for referencing during claims
- Keep track of any insurance claim-related legal cases that have set precedent in your state to stay aware of your rights as a property owner
PICA Group tips:
- While lodging your claim, if there is any doubt about coverage, you may be treated as being uninsured pending the outcome of the insurer’s decision. So, take care to check with your body corporate insurance specialist if you have any questions.
- When the insurer doesn’t cover damage to your property but you still need to get repairs done, you should take care to keep photographic evidence of damage and invoices for repairs for submission in the future.
- With regard to repairs and maintenance, you should be aware of the property plan and building regulations. You should find out what areas and infrastructure are under the purview of the body corporate responsibility and what are the owner’s responsibility. That can save you some headache when there are damages to your property and you can get your concerns addressed quicker.
- In case common property damage is not covered by the insurer, it depends on the body corporate members to cover the costs to ensure the property is restored to a structurally sound condition and compliant with safety standards for community living. Check with your body corporate on how that may affect your levy fees.
- Your committee and body corporate manager work closely to implement financing options, which might include the property sinking fund, self-funding, etc. You may wish to check if they also arrange specialist finance to ease the burden.