A strata insurance broker can be a Strata Manager’s strongest ally. Utilising the services of a specialist strata insurance broker can alleviate the heavy burden associated with insurance that falls on Strata Managers.
A specialist strata insurance broker can alleviate the heavy burden by;
- providing professional advice and assistance based on years of training and experience
- sourcing quotes and negotiating terms with insurers
- explaining and comparing policies, including any special risks you need to be aware of
- advising of any legislative requirements you may not be aware of
- handling claims and acting as your client’s advocate with your insurance provider
The additional service and advice you receive through utilising an insurance broker can even help Strata Managers avoid litigation, as evidenced in the claim example below. Please note, all names, numbers and dates in this article have been changed to protect the identities of the parties involved.
Strata Management company, Strata Mate Pty Ltd was looking after a Commercial Strata Complex in an industrial area with an insurance value of around $10,000,000. During their tenure of over ten years, Strata Mate had been given a standing order from the Owners Corporation committee of the Commercial Strata complex to renew directly with SOSI Insurance every year and to allow automatic CPI increases to sums insured. As is common practice, the Strata Manager at Strata Mate was paid a commission by SOSI insurance for referring the business to them.
After a few maintenance issues were not resolved to their liking, the Owners Corporation committee of the commercial strata complex made the decision to terminate their contract with Strata Mate and, in due course, they were replaced by another Strata Management company, Starlight Strata Pty Ltd.
Upon appointment, Starlight Strata initiated insurance renewal quotations with Insurers other than SOSI Insurance and presented them to the Owners Corporation committee. One of the new quotations presented was from a new Strata Underwriter and was 40-50% cheaper than what the Owners Corporation committee had been paying for the last ten years under the management of Strata Mate.
The Owners Corporation committee estimated that over the ten year period that Strata Mate managed their property, the total value of the differences in premiums paid was more than $50,000. In light of this, they decided to initiate proceedings against Strata Mate for the difference in ‘overcharged’ insurance premiums.
Strata Mate reported the matter to their Professional Indemnity Insurer, who advised that even if the claim failed in court and there is no claim payment required to be made for the perceived financial loss suffered to the committee, Strata Mate’s Professional Indemnity insurance policy could still respond for payment of the legal costs incurred to defend the claim.
So, what are the big lessons Strata Managers can take away from this claim example?
1. By obtaining alternative quotations each year and documenting these quotes to the committee, Strata Mate could have avoided this claims situation. Strata Mate could have presented a selection of quotations to the Committee for approval or re-negotiated with SOSI insurance to get better rates for their client.
2. If you are only using one Insurer for your insurance quotes, you could be at risk of a similar claim against you. Whitbread strongly recommends that you use an Insurance Broker who will automatically obtain a minimum of three quotes on renewal each year.
3. Professional Indemnity Insurance is the best protection against claims of professional negligence. Any company or individual providing professional advice or services can be held liable for financial loss arising from errors or omissions committed by themselves or their employees.
For more information or a quote for Professional Indemnity insurance, contact our resident Professional Indemnity expert, Holger Schnabel, by calling 1300 424 627.
This Whitbread insight article is not intended to be personal advice and you should not rely on it as a substitute for any form of personal advice. Please contact Whitbread Associates Pty Ltd ABN 69 005 490 228 Licence Number: 229092 trading as Whitbread Insurance Brokers for further information or refer to our website.