Water damage in Strata managed properties

Jurisdiction with Strata managed buildings

Within Strata managed residential buildings the Strata’s insurance covers against flood and water damage to the building’s common areas and to the structure of the building itself. This includes the sub-floors within each lot, as well as ceilings, skirting boards and internal walls that are boundaries to neighbouring lots or the outer perimeter of the building itself. If magnesite sub-floors are present then Strata’s insurance covers repairs to this as well.

In some (but not all) cases the internal walls within each lot that adjoin the lot’s rooms are also covered under Strata’s insurance. Also, sometimes permanent type floor coverings like ceramic tiles, parquetry, and wooden floors are covered. Importantly, floor coverings and internal walls within lot fall into a ‘grey area’ where they may instead be the responsibility of the lot owners to pay for any damage. You need to check your specific building’s Strata bylaws to know this for certain.

One important aspect to be aware of is in regards drying sub-floors while carpet and underlay are still in situ within any lot. In a typical flood scenario where carpeted floors are involved there is the need to dry the carpet, the underlay, and the sub-floor below fully to consider the restoration complete. While this can indeed be done simultaneously, when the carpet and underlay remain in situ the total cost of the restoration will be apportioned to the contents or landlord’s insurance even though a portion of the work is being done to the sub-floor which is the responsibility of the Strata. Conversely, if the carpet and underlay have been uplifted and removed and the sub-floor is being dried specifically, then the cost for this is covered by the Strata’s insurance.

Lot owners of Strata managed properties are still responsible to pay for costs associated with flood or water damage to their carpets, underlay, floating wooden floors, curtains, internal doors, and the paint covering the walls and ceilings.

Aspects like kitchen cupboards, vanity units and built-in wardrobes also fall under a ‘grey area’ whereby they may be covered by the Strata or may be covered by each lot owner, and again you need to check the specific bylaws of your building to know for certain.

Rental tenants are responsible to pay for costs associated with flood or water damage to their furniture and personal possessions, and for damage to the lot owner’s property should they be responsible for causing the flood through negligence.

Interestingly, while not routinely inspecting and replacing old hot water services and flexi-hoses every 5 to 10 years could be considered ‘negligence’ on the lot owner’s behalf; this is still considered an accident from the perspective of insurance companies.

Who pays for what?

Within Strata managed properties the cost for repairs associated with flood or water damage is one of the most misunderstood aspects of restoration. Many lot owners or rental tenants believe that repair costs work in the same fashion as with car accidents – whereby the person guilty of the accident (and/or their insurer) is liable for all costs across all properties. While morally this may be appropriate, in truth it is the exact opposite, and for a very good reason.

In Strata managed properties each individual lot owner and rental tenant is responsible for the repair costs to the property they own almost regardless of the cause or the water damage. This is because it is not feasible for every lot owner and every rental tenant to have insurance that covers every single property in the building. Imagine if they did? In a unit complex with, say, 40 units, each lot owner would have to have insurance to cover their unit plus 39 others against damage they can possibly cause. That’s 1600 policies, with each lot insured 40x over! If half have rental tenants then add another 800 policies to this!

For this reason it is important that every lot owner and rental tenant have their own insurance to protect themselves, and not rely on the false ‘safety’ of living in unit complex. Flood damage occurs far more frequently than break-ins or theft.

One exception to this rule is when there is intentional malicious damaged caused. If someone floods a building intentionally then they can be held criminally liable for all costs. They cannot, however, be insured for such an instance, so each lot owner or rental tenant would still claim on their insurance in any case.

Another exception to the rule is when a tradesperson has accidentally caused damage due to clear negligence or poor workmanship, or when a product they have installed has failed due to poor build quality or is insufficiently chosen. Under these circumstances the builder’s or their supplier’s insurance can potentially cover 100% of the costs of any and all repairs, but again often the lot owner or rental tenant begin by claiming against their own policy and lets their insurer counter claim to recover costs at a later time.

We have observed that only around 70% of landlords hold landlord’s insurance on their rental properties, which seems to be due to two reasons. The first is that not having insurance is a cost savings, and secondly they simply perceive (incorrectly) that a unit is a safe property and damage is not likely to occur. Any property that is over around 10 years old and has either an internal hot water service and/or braided style water hoses fitted throughout is literally a ticking time bomb for flood damage.

Rental tenants need contents insurance for two primary reasons. The first is to protect their furniture and personal possessions against flood or water damaged caused by any occurrence at all. The second is to protect the lot owner’s carpet, underlay, curtains and paint against damage the rental tenant can easily cause by flooding the apartment by an overflowing sink or washing machine.

In summary, cover yourself with appropriate insurance as most of the time you will be responsible to pay for flood or water damage to you own property regardless of the cause.

The four most common causes of flood (case studies)

There are four common causes of flood and water damage to properties in Strata managed units and, while in each case there are similarities when approaching any restoration, there are some distinct differences between each.

Once Mr Flood’s crew are on site we will assess the damage and advise you of the best course of action. In the cases of clean water flooding, if the damage is minimal there may be no need to alert additional parties like Strata, though if we believe that Strata or estate agents/lot owners need to be advised we will endeavour to do so immediately.

We will also advise you on who is responsible to cover costs for the restoration on each aspect of the job. In most cases the lot owner will be responsible for costs associated with floor coverings, paint and curtains, along with their furniture and possessions. Rental tenants are responsible to cover the costs for their own furniture and personal possessions. The Strata is responsible for structural drying, repairs to gyprock, skirting boards, and in some cases vanities, kitchen cupboards and wardrobes.

Burst hot water service or flexi-hose

Most units feature an internal hot water service and at least half a dozen to a dozen flexi-hoses under sinks, vanities, and connected to dishwashers and washing machines. All of these can cause major floods in a matter of minutes when they burst, which is why hot water services should be inspected and replaced every ten years and flexi hoses every five years.

If these features fail due to old age then the associated costs for all aspects of the restoration are as outlined above. If a hot water service fails prematurely then the costs for 100% of the restoration can sometimes be covered by the plumber who installed it (if poor or incorrect installation is to blame), or by their supplier if the product failed.

In January of 2016 Mr Flood conducted a major restoration on an office complex in North Ryde where 1000 sq/m of office space was flooded to a depth of 5cm by a small hot water service that failed. It turned out that the company conducting the renovation of the office had hired a sub-contract plumber to install a hot water service. When the failed hot water service was inspected by a third party plumber it was revealed that the hot water service was incorrectly installed by the sub-contracted plumber. In this case the entirety of the restoration (over $250,000!) was paid by the insurance for the plumber.

Blocked sewerage drain pipe

Blocked sewerage drain pipes are commonly caused by tree roots growing into them or by people flushing inappropriate things like soiled nappies down their toilets. In most cases the blockage occurs low in the building, commonly below the ground level where the vertical pipe turns horizontal. When the sewerage backs up it will eventually fill to a point where is starts overflowing from the lowest floor waste outlets in the building, and most of the time this is the laundry and bathroom floor drains in the nearest ground level unit of the building. This is one good reason to never live in a ground floor unit!

When any sewerage damage occurs to carpets we do not attempt to restore the carpets, as the sewerage is a severe health hazard. We insist on all contaminated carpet and underlay being uplifted and removed for disposal. This is also the case for any permeable material or furniture that cannot be wiped clean, sanitized and disinfected.

Once done the hard surfaces and sub-floor need to be sanitized and disinfected, then structural drying may need to be applied to sub-floors. Once dried we will then conduct swap testing for laboratory analysis to ensure that the lot is safe for new flood coverings to be installed.

While for most cases we have found that the costs to restore the lot owner’s and the rental tenant’s property are their own, there have been some circumstances where Strata has covered a portion of costs pertaining to water extraction in the lot itself with flooding associated with blocked drains. Strata will cover all the costs associated with structural drying of the sub-floors, as well as the sanitizing treatment and swab testing.

Severe storm causing overflowing balcony or leaking window

It is very common during intense rain storms for balconies to overflow and water to enter a lot via the doorways or vents in the brickwork, or via cracks or poor water-proof sealing – even in near new buildings. This is occurs most frequently after Autumn when fallen leaves block drains and the weather changes as storms become more frequent.

Many lot owners and rental tenant believe that it is the responsibility of the Strata to cover 100% the costs for all aspects of the restoration due to it being their responsibility to maintain the building, but this is not the case. The fact is that each lot owner and tenant is responsible to keep the drains of their balconies clear from debris – not Strata.

Just like any other accidental flood, when it comes to leaks from stormy weather it is each individual party that is responsible for the costs associated with restoring or replacing their own property.

Overflowing machine or sink/bath

When a lot owner occupies their own unit the costs associated with restoring flood and water damage from overflowing sinks, baths or washing machines are clearly defined, with the owner covering the cost for flood coverings and their personal possessions. Meanwhile, if the flood is so severe that the carpet and underlay are removed to reveal the bare sub-floor, costs for performing structural drying is covered under Strata’s insurance.

In cases of rental tenants inadvertently flooding the lot due to leaving a bath running or from a washing machine, it is the rental tenant who is legally responsible for covering the cost of restoration to the carpet and underlay or floating wooden floors, as well as their own possessions and furniture. This is why it is wise to have contents insurance even when you rent a unit.

2016-07-27T09:12:20+00:00 July 27th, 2016|