With many of today’s managing
agents having been challenged about insurance commissions received now opting out
of dealing with insurance claims altogether this is a question that seems to
get raised more and more.
If an insured damage is suffered
to the communal parts of the development the answer is simple the management
company will pay it.
What happens though if your
property suffers water damage from the flat above?
The terms of the policy will no
doubt read along the lines of the policy holder or claimant will be responsible
for the excess which will automatically be deducted by the insurer upon
settlement of the claim.
As most block policies are in the
name of the management company then that would make them the policy holder and
therefore they will be responsible for the excess?
In most cases the claim form will
be completed by the managing agent on behalf of the management company they
represent, so again in this instance the claimant and the policy holder are the
management company and therefore responsible for the excess.
If your managing agent no longer
deals with claim handling then it is up to the owner of the property that has
suffered water damage to make the claim and then they will be responsible for
the excess and recovering those costs from the flat above.
Depending of course on the cause
of the water damage from the flat above is it fair for them to have to pay the excess?
If they were negligent or refused
to deal with an escape of water despite being advised then yes by rights they should
pay the excess however what if the residents of the flat that suffered the
water damage went away for a few days and the water leak went un-noticed should
the flat above then be responsible?
Another way at looking at it is
if both flats had separate insurance then the insurance company dealing with
the water damage claim would look for reimbursement of all costs including the excess
from the insurer of the flat that was the source of the water leak.
With a block policy all
properties are insured as a whole and by one insurance company therefore the
insurance company would look to reimburse costs from themselves with the
exception of the excess which would be payable by the policy holder.
Therefore and what we advise our
clients is unless the cause of the water damage is due to a person’s negligence
the excess is paid by the management company through the service charge funds. Needless to say the final decision rests with the client!
It is therefore equally important
when arranging block insurance cover to ensure you do not sacrifice a lower
premium in favour of too high an excess charge as you can never guarantee the
amount of claims that will be made and that could lead to a serious budget
deficit.
