Maintaining a strata title building is not only essential for its overall appearance and functionality but also for securing adequate insurance coverage. Failure to maintain a building can result in increased premiums, coverage exclusions, or even denial of claims. This article outlines some of the key risks and explains how to ensure your strata building is adequately maintained.
Why maintenance matters
Insurance providers assess risk when determining coverage and premiums for strata title buildings. A well-maintained building is considered lower risk, as regular upkeep helps prevent potential hazards, such as structural damage, water leaks, electrical faults, and fire risks. In the event of a catastrophic incident, such as a fire or structural collapse, the lack of proper maintenance may also give rise to liability concerns.
Legal liability claims
Poor maintenance can increase the risk of accidents, injuries, or property damage, for which owners may be held legally responsible. Inadequate repairs or upkeep of common areas can pose significant issues, such as slip and fall incidents, electrical hazards, or structural failures. When negligence is established, affected parties can seek compensation through legal action, potentially resulting in costly settlements or judgments against the owners.
Higher insurance premiums and Imposed Excesses
Insurers want assurance that the building is being well-maintained and that the strata title owners are taking necessary precautions to mitigate risks. Insurance providers may view a poorly maintained building as a higher risk, leading to higher premiums and imposed corrective excesses to offset the potential costs of future claims. This can strain the strata title building's budget, as higher insurance costs directly impact the overall expenses borne by the owners or tenants.
In some cases, insurance companies may refuse coverage altogether if they perceive the building to be in a state of disrepair.
Insurance policies typically have clauses that outline the insured's obligations, such as conducting regular maintenance and upkeep. Insurance claims resulting from maintenance-related issues may be denied if it can be shown that the loss occurred because of negligence or a lack of proper upkeep. If it is determined that the strata title owners failed to address known maintenance issues, the insurer may deny the claim, leaving the owners to bear the financial burden.
We are now seeing instances where Bodies Corporate that have failed to rectify significant maintenance issues are unable to secure insurance or they are subject to cost-prohibitive insurance solutions with overseas insurers.
Strata title building owners must prioritise regular maintenance and upkeep, including routine inspections, addressing repairs promptly, maintaining common areas, and ensuring compliance with building codes and regulations. Engaging professional contractors and building maintenance services can help ensure these tasks are performed to a high standard.
Engaging with insurance professionals who specialise in strata title insurance can provide you with expert guidance on coverage options, insurer requirements and it can help secure appropriate insurance despite the maintenance challenges.
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