Why Is My Body Corporate Insurance Claim Taking So Long?

body corporate insurance claimI’m a lot owner in a scheme in Brisbane. Our townhouse (and many other in the complex) was damaged by the storm on 31/1/2015.  All damaged caused by branches falling off large gum tree in body corporate common area.

It’s been more than 3 months, nothing has been fixed (including other lots in the complex). I have contacted the body corporate management couple of times regarding the claim, and asked them whether I can fix my own townhouse, and send through the bill to the insurance company, but I never get a reply. All they saying was waiting for a report from the loss assessor. I contacted the loss assessor, they advised they are waiting for the quotation from body corporate.

I’m not sure what to do from now? Hope you would give me some advise.

Rita

I understand your frustration at the length of time it’s taking to move forward with finalising your body corporate insurance claim.

The good news is its normal for things to take this long. The bad news is it could be even longer still.

There’s two things that make the whole process time consuming;

  1. The insurance companies claims process, and
  2. The way body corporate’s operate

Insurance Claims Process

If you’ve ever made a claim with an insurance company you’ll know that there’s a lot of ‘boxes’ that need to be ticked before anything happens.

Body corporate insurance works much the same as individual insurance, just a bit more complicated. Strata schemes can be more complex and then there’s the issue of who is responsible; the body corporate or a lot owner.

Whoever’s responsible will pay the insurance excess.

To complicate things there are many sorts of claims that can and will be made.

For instance, I saw a building that had a number of claims for windows destroyed in the storm. The windows had to be boarded up and then replaced. A claim was made by the lot owner and the insurer reimbursed those costs.

However, that same building had other claims which were required to be assessed. Out of the blue the Assessor authorised lot owners to repair and replace window frames, settling part of the claim, but held off on the larger claims of the body corporate.

Each claim, or handful of claims is specific to the scheme.

The process for an insurance claim I would expect to see goes something like this:

  • The claim is made by the body corporate (whether the matter is body corporate or lot owner responsibility)
  • The insurance company will appoint a Loss Assessor to inspect the premises
  • The Loss Assessor will assess. They’ll look at the damage and decide if the matter was caused by the ‘event’ and if it was an insurable event.
  • The Loss Assessor may then ask the body corporate to source quotes to rectify the work. The cost estimates will be included in the report.
  • The Loss Assessor report is submitted to the Underwriter who will then decide if, when and how much they will pay on the claim.

What happens next will really depend on the Loss Assessor and the insurance company.

They may reject the claim outright. They may pay the claim in full or part. They may instruct the body corporate or lot owners to undertake works and forward the bill to them.

Don’t forget that the whole process will take even longer because of the sheer volume of claims made, such as following a major storm event like this one.

The Way Body Corporates Operate

The other half of the puzzle is the body corporate.

It’s a misconception that the body corporate manager makes decisions. They do not. The Committee makes all the decisions for the body corporate.

When it comes to insurance claims that means there’s multiple layers of communication and multiple places where that communication may break down.

When decisions are required Committee’s need to meet, either in person or through a vote on a motion, further delaying the process.

Even something as simple as sourcing quotes may require waiting weeks or even months before the Committee meet again to instruct the body corporate manager and the onsite manager.

Meanwhile the works can’t be undertaken until the insurer makes a final decision.

Even when the decision is made the process may further be drawn out by a need for a general meeting if the cost to be funded by the scheme are sufficient spending limits are breached.

What you can do

It is disappointing that your body corporate manager hasn’t replied to your queries. Even if they have nothing new to tell you that’s still something.

Having said that, it does appear that they are taking action and following the process that I would expect to see, just glacially slow as the works of body corporates can sometimes be.

Keep trying to make contact. If nothing else it may spur the manager and Committee to follow things up themselves.

Do look out for any Committee meeting minutes as they will be your best source of information as to what’s happening.

At the end of the day be patient is my best advice.

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