November 2018 – Insurers have a lot of power

A recent storm on the Gold coast affected one of the schemes that we manage.  There was water damage to two lots after severe hail cracked and lifted tiles above their townhouses.  The scheme is on a building format plan of survey so the impact to the roofing above the two lots was a body corporate responsibility.  The insurer’s panel repairer did a make safe and prepared an expert’s report.  In that report, it was stated – ‘Cracking to ridge cap pointing to lower and upper roofs evident’.  Additionally, they noted that ‘The above repairs should be completed by a qualified trade prior to insurance related works commencing.’  They formed the view that this component of the overall damage was due to overdue maintenance and not a consequence of the storm.

The insurer has approved the repairs for the consequential damage from the storm.  However, this will not commence until the Body Corporate provides evidence that the maintenance issue has been corrected.  A quote provided by a related party to the panel repairer was $11,000.  An EGM is required to approve a quote of that nature and additionally two quotes are required and a lengthy process to run an EGM in accordance with the legislation.  Repairers are hard to source because there are many properties needing repair in the area.  A second quote has been sourced.  A third contractor contradicted the expert’s report but unless the original expert withdraws their report commentary regarding the pointing, the insurer is unlikely to change their position.

A small body corporate does not have the time or money to invest in challenging expert’s reports, nor getting the insurer to modify their position.  Insurers have a lot of power!  Meanwhile the impacted lot owners worry whilst their lots remain unrepaired and the storm season continues.