Water damage in apartment block

by Readers Question

10:44 AM, 16th October 2015
About 3 years ago

Water damage in apartment block

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Water damage in apartment block

As the MD of a right-to-manage company, I’ve had the misfortune of being caught in the crossfire of a water damage incident (ie water has leaked from one flat into another causing significant damage to the ceiling) – I’m not prepared to use the buildings insurance to make a claim since the value of the claim is too small to justify and would push up our premium next time round.water damage

I believe the offending flat owner should foot the bill for this since I believe the damage is due to disrepair rather than an act of God for example. However this puts me in an awkward position having to arbitrate between the two flat owners.

My concern is that simply claiming insurance gives each flat owner no incentive to manage or take responsibility for any disrepair issues.

Does anyone have any advice or experience as to how this sort of incident could be handled amicably in the future. For example could individual flat owners take out their own insurance to cover their flat only ?

Any suggestions appreciated.

GP



Comments

BP Surrey

11:25 AM, 16th October 2015
About 3 years ago

As the secretary of an RTM company we too avoid making small claims to avoid the premium being bumped up on renewal. The flat owner who has suffered the damage is entilled to have the damage made good as I assume they pay their share of the insurance premium. To avoid small claims, we introduced a ruling that the leaseholder making the claim is responsible for paying the excess of £200. The leaseholders are reminded of this each year when we send out our annual report and are told any claims should be made to me and I will then arranged for the damaged to be inspected. We had just one claim in the last two years since introducing the ruling (from 60 flats) and the leaseholder was a bit put out by the £200 excess and we advised him to take it up with the leaseholder that caused the damage. We paid the other part of the claim which also amounted to around £200 from our maintenance budget. When the RTM company took control of the maintenance, the insurance premium was around £6800, today we pay £3150. The combination of introducing the £200 excess payment and fact we inspect the damage on all claims seems to have worked well.

Mike W

13:13 PM, 16th October 2015
About 3 years ago

GP,
A few thoughts in addition to BP.
Firstly whatever you believe about maintenance I would argue it would be difficult to prove.
Secondly most insurances I have dealt with cover damage by escape of water and did not define its cause. So it is possible that the owners of the flats are entitled to make a claim.
Thirdly you are probably obligated to inform the insurer of any event even if you do not make a claim. They can often make helpful suggestions as to how to best solve the problem.
Fourthly what does the lease state/managing company rules state? Are you 'making up rules' for something that is or is not already covered in the lease or leasehold law? If you are making up rules are you authorised to do so by all shareholders?
Fifthly my experience has shown that despite assumptions being made about insurance premia after a claim, the premium did not in fact increase. Indeed we shopped around and got a reduction as the existing insurer promised to match any quote.

Hope this helps. I have tried to argue the points logically with the limited info posted.

Joe Bloggs

16:13 PM, 16th October 2015
About 3 years ago

Reply to the comment left by "Mike W" at "16/10/2015 - 13:13":

Hi mike

if you have a particularly bad claims history it will definitely increase renewal premium.

the person/party making the claim should pay the xs irrespective of who is at fault. obviously the option is open for action to be taken to recover the xs from the party at fault but i believe the tort of strict liability does not apply and so it will be necessary to satisfy the tests of forseeability/ negligence.

this is what ARMA say on the subject:

'Excesses
It’s common for insurance policies to contain
excesses for some risks. For example, you may have to pay
the first £100 in water damage claims, or the first £1,000
in subsidence claims. The excesses may be higher if your
block has a poor claims record.If your flat has been damaged and an insurance
claim is being made, the managing agent or freeholder might
not be able to recover the excess on your behalf, even if
the damage was caused by another flat. You may still be
asked to pay the excess in order for the claim to go ahead.
It may not be appropriate, or lawful, for the excess to be
paid from the service charge account.'
http://arma.org.uk/downloader/f12.pdf

Genghis Perriaman

17:27 PM, 17th October 2015
About 3 years ago

Many of you are inferring that because liability is often difficult to prove, the default position should be that whoever makes the claim should pay the excess even if the damage is caused by another flat - I disagree as in effect what you're saying is that the owner of the offending flat gets off scot free and is therefore under no incentive to ensure that their individual flat is in a good state of repair and prevent damage to other flats arising due to their negligence.

Just like car insurance the innocent party shouldn't have to pay their excess in the event of an accident this should be covered by the insurers of whoever is at fault.

Just to reiterate my article - here we are talking about maintenance work that has been carried out to a poor standard resulting in leakage to the flat below - we are not talking about a burst pipe that's occurred out of the blue in which case I could understand why the insurance route would be appropriate

I still feel strongly that the main buildings insurance should be reserved for major structural repairs costing £1000s not £100s

One idea is that why doesn't each flat owner have insurance specifically for their flat then a claim can be made without financial hardship to the parties involved and without the other non-involved feat owners having to unfairly pay higher premiums or share in the repair costs ??

Joe Bloggs

19:12 PM, 17th October 2015
About 3 years ago

i hear what you say and the unfairness, BUT the person who makes the claim pays the xs. how are you going to MAKE the guilty party pay if they wont play ball, other than legal action?


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