It depends on where the damage started and why. Consumer Affairs Victoria says an owners corporation may separately levy a lot owner for the excess on a claim that relates solely to that owner’s lot, or where the claim was caused by the negligence or a wilful act of that owner, their tenant or a guest. When a leak damages common property or several lots and no one owner is at fault, the excess usually stays with the owners corporation and every owner shares it through levies.
Who makes the claim on the building policy
In Victoria the owners corporation insures the building, not each owner. Consumer Affairs Victoria says every owners corporation except a two-lot subdivision must hold reinstatement and replacement insurance for the buildings on common property, plus public liability cover of at least $20 million for the common property. Because the policy belongs to the owners corporation, the claim is lodged in its name, which in most blocks means the strata manager does the paperwork.
That surprises owners whose ceiling is dripping. You cannot ring the strata insurer yourself and expect it to act. Report the leak to the manager in writing, attach photos and the date you first saw it, and ask for the claim number once it is lodged. If the water is still running, tell the manager what you shut off and when. Those details end up in the assessor’s file.
Where the leak started decides the rest
Every water claim in a block turns on two questions: where did the water come from, and what made it escape? A cracked riser pipe in a shared wall is a common property problem. A washing machine hose that split inside one apartment is a lot problem, even though the damage shows up in the unit below.
The plan of subdivision and the owners corporation rules draw the line between lot and common property. Some plans put the boundary at the inside face of the walls and others elsewhere, so it is not the same in every building, which is why the manager will often send a plumber to find the source before anyone works out who pays the strata excess.
The cause matters as much as the location. Strata policies commonly exclude gradual deterioration, water entry through failed waterproofing and defective building work. A shower membrane that has leaked slowly for two years may not be a claim at all, and then the question is who pays for the repair, not who pays the excess.
When the owners corporation can pass the excess to one owner
So who pays the strata excess? Consumer Affairs Victoria lists three situations in which an owners corporation may separately levy a lot owner rather than spread a cost across all levies:
- Fault. The excess, or an increased premium, resulting from a claim caused by a culpable or wilful act or the negligence of a lot owner, a tenant or their guest.
- Uninsured damage to common property. Damage a lot owner or tenant causes to common property that the policy does not cover, or that costs less than the excess to fix.
- A claim that affects only one lot. The excess on a claim that relates solely to that owner’s lot, whether or not anyone was careless.
The third point catches people out. If the only damage is inside your apartment and the claim is made on the building policy, the owners corporation can ask you for the excess even though you did nothing wrong. When the leak damages common property or more than one lot and no single owner caused it, the cost usually stays with the owners corporation.
Strata excesses are set for the whole building, and many policies carry a separate, higher excess for water damage than the standard excess on the schedule. Ask the manager for the current excess before the next leak rather than after it.
What your own policy can pick up
Consumer Affairs Victoria notes that lot owners can take out their own insurance for damage to their lot or their interest in the common property, separate from the owners corporation policy. For most owner occupiers that is a home and contents policy written for an apartment.
It does three jobs when water gets in. It pays for your furniture, electronics and other belongings, which the building policy does not touch. It can pay for fit-out you added, such as a renovated kitchen or new flooring, where the strata policy covers the building only as originally built. And some contents policies include cover for the strata excess when a levy lands on you, usually up to a stated limit. Read that section before you rely on it, because not every policy has it.
If the leak came from the apartment above, your contents claim does not have to wait for the owners corporation to settle who was at fault. Your insurer can pay under your policy and then pursue whoever caused the loss.
If you think the charge is wrong
Ask the manager in writing which ground the levy relies on and for a copy of the plumber’s report. Many disputes end there, because the report shows the pipe was common property after all.
If it does not, Consumer Affairs Victoria describes a three-step path. First, every owners corporation must run an internal complaints process, and a lot owner can complain in writing on the approved complaint form. If the owners corporation decides to take no action, it must give written reasons. Second, a lot owner can seek help from the Dispute Settlement Centre of Victoria, which can only assist if all parties agree to take part. Third, the matter can go to VCAT. Consumer Affairs Victoria also notes that VCAT can order a lot owner to pay the owners corporation’s reasonable costs of recovering an unpaid amount, so ignoring a levy you dispute can make it more expensive.
None of this replaces legal advice on your plan and your facts. It does tell you which questions to ask first.
What FRS does
For committees, we check the excess structure and how water damage between lots is handled before the policy is placed, and compare the building sum insured with a current valuation. When a burst pipe comes in, we help the manager lodge the claim and follow it through with the insurer. For owners, we read the strata schedule before quoting a contents policy, so you are not paying for building cover twice and you know whether the strata excess is covered. If you are lodging a claim now, our claims page lists what to send.
For the cover sections and usual exclusions on the building policy, see our strata insurance page.
Frequently asked questions
Can the owners corporation make me pay the strata excess?
Yes, in some cases. Consumer Affairs Victoria says an owners corporation may separately levy a lot owner for the excess when the claim relates solely to that owner’s lot, or when the claim was caused by the negligence or wilful act of the owner, their tenant or a guest. Otherwise the excess is usually shared through levies.
Who lodges a strata insurance claim for a water leak?
The owners corporation, because the building policy is in its name. In most blocks the strata manager lodges the claim with the insurer. Report the leak to the manager in writing with photos and the date you first noticed it, and ask for the claim number so you can follow progress.
Does my contents insurance cover the strata excess?
Some policies do. Certain home and contents policies written for apartments include cover for an owners corporation excess levied on you, usually up to a stated limit, while others leave it out. Check the policy wording or ask your broker before a leak, because the excess on a strata water claim can be significant.
What can I do if I disagree with an excess levy?
Ask the manager in writing which ground the levy relies on and for the plumber’s report. If that does not settle it, use the owners corporation’s internal complaints process, then the Dispute Settlement Centre of Victoria if all parties agree, and finally VCAT. Consumer Affairs Victoria sets out these steps on its website.
Questions about your own cover? Call 03 7046 3766 on weekdays between 9:30am and 6pm, or send us an enquiry.
