What is building for Strata in New South Wales

Apartment BuildingsI had a question regarding what forms part of the building under a body corporate policy following the denial of a claim by an insurer on floor tiles that the Insured has replaced.

Another tenant in the same building contacted me as he was about to change over his as well.

The problem was the strata insurance policy, as it reads, only covers the original tiles. It does not exclude replacement tiles but is rather silent on the issue.

New South Wales Fair Trading was contacted for their opinion and they advise as follows in an recent email.

As discussed, a lot owner is responsible for providing the owners corporation 14 days written notice of any proposed structural alterations; the notice must state what the alterations are going to be.

Once this approval has been given, preferably in writing, the Owners Corporation must take reasonable steps to notify the insurance provider and upgrade the insurance policy of amendments and alteration to the building.

Furthermore, under the Strata Scheme Management Act 1996, Part 4 states This Part requires an owners corporation for a strata scheme for a building to take out insurance on the building. In the case of a strata scheme for a part of a building, the obligation to insure is placed on the owners corporation and the owner or owners of the rest of the building.

Section 81 further states;

In this Part, building includes:

(a)  owners improvements and owners fixtures forming part of the building other than paint, wallpaper and temporary wall, floor and ceiling coverings, and

 (b)  a building consisting entirely of common property, and

(c)  anything prescribed by the regulations as forming part of a building for the purposes of this definition,

but does not include:

 (d)  fixtures removable by a lessee or sublessee at the expiration of

a tenancy, or

 (e)  anything prescribed by the regulations as not forming part of a building for the purposes of this definition.

If in the case that owners improvements and owners fixtures that form part of the building is disputed by the  insurance policy and its provider you may wish to seek independent legal advice.

This all makes sense to me and is in keeping with long established insurance practice. I just wish the policy wordings were clearer and followed the legislation.

I am yet to find out if the Insurer will continue with their denial of liability.

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