Strata water damage is where lot boundaries, by-laws and policy wordings collide. Water from one lot ends up in the ceiling of another, runs through common property on the way, and leaves several owners, a tenant and a committee asking who pays. The building policy is the starting point, and our residential strata insurance page explains how it is structured. This article works through the questions that decide each leak: where the water came from, what failed, when it started, and what the scheme does to stop it happening again.
The entity holding the policy is called an owners corporation, body corporate or something similar depending on the state, and the rules on lot boundaries and maintenance vary by state and by plan. Check the current requirements where your scheme is located.
Common Property or Lot Property?
The first question is who owns the thing that failed. The strata plan and the rules in your state set the boundary, and it does not always fall where owners expect.
- Pipes. Pipes inside a wall or slab may be common property even where they serve one lot. A flexible hose under a sink or behind a toilet, on the lot side of the stop valve, is more likely to be the owner’s.
- Shower and bathroom waterproofing. Membranes can be common property where they sit within the boundary structure, but this depends on the plan and the state.
- Balconies. The tiles may belong to the lot while the membrane and slab below them sit with common property. A balcony leak can involve both.
- Hot water systems and appliances such as dishwashers and washing machines are usually the lot owner’s.
Ownership decides who is responsible for fixing the failed item. It does not decide whether the building policy responds to the resulting damage. Those are separate questions, and mixing them up is where disputes start.
What the Building Policy Pays For, and What It Leaves Out
Building policies typically respond to damage caused by a sudden and unforeseen escape of water. They typically do not pay to repair the thing that leaked. A burst hose may lead to a claim for new plasterboard, flooring and paint in two lots; the hose itself is a maintenance cost.
Watch for three wording points:
- Gradual damage and wear. A shower that has leaked slowly behind the tiles for months, or grout and sealant that failed with age, usually falls under maintenance, wear and gradual deterioration exclusions. Rot, mould and rising damp are commonly treated the same way.
- Finding the leak. Some policies include an allowance for locating the source, such as removing tiles or opening a wall, and restoring what was disturbed. Others do not. Check the limit before a plumber starts cutting.
- Water damage excesses. Some schemes carry a higher excess for water claims than for other events. Know the figure before deciding whether to claim.
Who Claims for Strata Water Damage
Damage to the building, including ceilings, walls and fixtures inside lots that form part of the building, is claimed by the owners corporation on the building policy, usually through the strata manager. Our step-by-step guide to how a strata insurance claim works covers lodgement and the assessor’s role, and the residential strata page explains where the building definition typically stops.
Everything else sits with individual owners and occupiers:
- Furniture, belongings and, depending on the state and plan, floor coverings and curtains go to the owner’s or tenant’s own contents policy.
- Lost rent while a unit cannot be lived in may be partly addressed by the building policy, but landlords should look to their own landlord cover for anything beyond a limited allowance.
- Owner improvements, such as an upgraded kitchen, may or may not fall within the building policy’s definition. Tell the strata manager about significant improvements, or insure them separately.
Lot owners should also check the liability section of their own policy. If water from your lot damages a neighbour’s belongings because of something you failed to do, the neighbour or their insurer may look to you. A contents or landlord policy may include liability cover that can respond, depending on the wording. Our home and contents page explains what those policies typically include.
How the Excess Is Allocated
The insurer applies one excess to the claim. Who inside the scheme bears it is a separate decision. Some schemes pay excesses from scheme funds. Others, where their by-laws or resolutions allow, pass the excess to the lot where the leak started or the lot that benefits from the repair. What a scheme can do depends on state rules and its own by-laws, so ask the strata manager which approach applies and check current requirements before assuming. See how an insurance excess works for the mechanics.
Where a leak affects several lots, the committee should record its decision on the excess in the minutes. A consistent rule, applied the same way every time, heads off the arguments that follow a claim.
Repeat Leaks and the Scheme’s Premium
One burst hose is an event. The same bathroom leaking into the same ceiling again and again is a pattern, and underwriters price patterns. Repeat water claims can lead to a higher water damage excess, a specific excess for a lot with a history, tighter terms, or fewer insurers willing to quote at renewal. Our explainer on how strata premiums are worked out covers the wider factors.
What committees can do:
- Fix the cause, not just the damage. Pay for a plumber’s report that identifies why the water escaped.
- Keep a claims log by lot, date and cause, so patterns show early.
- Run a building-wide programme to replace ageing flexible hoses and check stop valves, where state rules and by-laws allow the scheme to do so.
- Inspect balcony and shower waterproofing in older buildings before membranes fail, and budget for replacement.
- Ask owners and tenants to report weeping taps, stained ceilings and drummy tiles early.
- Put the maintenance record in front of the insurer at renewal. It shows the risk is being managed.
Common Questions
My upstairs neighbour’s shower leaked into my ceiling. Who pays?
The ceiling is usually part of the building, so the damage goes through the strata manager as a claim on the building policy, subject to the wording. Repairing the shower itself is a maintenance question for whoever owns the failed part. Your own belongings sit with your contents policy.
Why was our claim declined as gradual damage?
Policies typically distinguish sudden escapes of water from slow leaks and wear. If the assessor found long-term seepage, that exclusion may apply. Ask for the assessor’s report and talk it through with your broker.
Can the committee make one owner pay the excess?
Sometimes, where the by-laws or resolutions allow it and state rules permit. Ask the strata manager which decision applies to your scheme.
Talk It Through
Request a strata quote or call 1300 983 940 and we will review your scheme’s water damage terms, excesses and claims record with the committee. For the wider cover options, see our strata insurance page.
General advice only. This article does not take your objectives, financial situation or needs into account. Consider the relevant PDS and Target Market Determination before deciding on a policy.