How to Identify a Recovery on a Strata Insurance Claim
Residential strata insurance (also known as body corporate cover in some states) is general insurance that covers common property under the management of a strata title or body corporate entity. Holding strata insurance is mandatory under each state’s relevant strata legislation.
Strata insurance generally covers common or shared property as defined in the title of the property. This might include common areas, lifts, pools, car parks, gardens, wiring, balconies, walls, windows, ceilings and floors.
When a claim is lodged, it’s the strata insurer’s task to then process the claim, sometimes paying for repairs, then, if there is a recoverable loss, seeking the recovery for that loss.
As strata claims recovery agent specialists, we at Debt Recoveries Australia, see many types of losses. It’s important for the strata claims operator to identify if there is, in fact, a recoverable loss and do this early in the life of the claim.
What to Look For
Understanding what scenarios are likely to have the potential of recovery is vital to the claims process and it is important this is identified at the commencement of a claim. These can include, but are not limited to, the following:
- Water Damage
- Damage by Tenants
- Building Defects
- Faulty Workmanship
All of these scenarios potentially have a cause attributed to the negligence of another party who can be pursued for recovery of any incurred costs.
What Information Do You Need?
In order to increase the chances of a successful recovery, you will need to ensure all available information is received on the claim. This will vary depending on the scenario, however the following are what you would expect to receive on most cases:
- Name and contact details of the responsible party and/or any witnesses
- Photographs of the damage, offender, vehicle etc.
- CCTV footage (if available)
- Police / Fire reports
- Lease Agreements / Applications (for damage by tenants)
- Details of any recent building works at the property
- Strata / Property manager contact information
- Repair / Replacement quotes and invoices
Educating Strata Managers
As the strata manager or property manager will be the first person to be notified of a claim, it is important to make them aware of the above requirements. The first notification of a loss can potentially be the only time information will be provided by an insured or debtor.
A common scenario is the strata manager advising the at fault party just to pay the insured’s excess to resolve the matter. In doing so, they are prejudicing the rights of the insurer and their ability to recover their incurred costs. Whilst recovery can still be attempted, this will more often than not be made all the more difficult by the debtor and subsequently reduce the chances of a full recovery.
Strata manager can also undertake regular maintenance rather than lodging claims for small issues. They can also review the claims history of the strata complex with a view to coming up with a risk management process. Is there scope to reduce the number of claims made during the year? Is the strata manager making claims for building maintenance issues that can be solved by regular repairs? Can the strata manager make improvements to the property that will reduce the insurable risks? The strata manager will be well placed to do all of the above in conjunction with their strata insurer.
When Should Claims be Outsourced to Debt Recoveries Australia?
We always recommend that any recovery matters be provided to Debt Recoveries Australia at lodgement of the claim. Our experienced staff can then ensure all relevant information is obtained, commence contact with the responsible party as well as handling any liability disputes.
What is the Strata Claims Recovery Process?
After a case is received, our team can begin the collection process immediately. Often, the case handler will need to conduct some research before initiating any action. For instance, the nature of the claim will need to be thoroughly understood before the third party is contacted.
When the initial research is completed, the case handler will then attempt to contact the third party to notify them of the debt through a phone call, an email and/or letter of demand. Depending on the circumstances of the claim and the information known about the third party, the letter of demand is typically sent via mail or email. If it is unknown where the letter of demand needs to be directed to, first contact will be made via telephone until the correct information is obtained.
After contact is made, and the third party is aware of the outstanding debt, the case handler will attempt to negotiate repayment in suitable terms. If contact is not made or if the third party is ignoring the demands, the case is marked to be reviewed by a senior account executive. In addition to continually attempting to speak with the third party, further research will be conducted to uncover information about the individual, such as their financial status and online presence. The following letters of demand will then be sent until contact is made with the third party and a suitable payment arrangement agreed upon: final letter of demand, notice of intention to sue letter of demand, and legal letter of demand. Further action can be taken at the discretion of the client.
If contact cannot be made, a skip-tracing review is conducted by our own skip-tracing specialists using various search engines and databases to locate the current whereabouts of the debtor. Depending on the circumstances, field calls are sometimes utilised but customarily used as a last resort.
Should recovery not be made after all avenues have been pursued the claim will be reviewed by ADC Legal, our litigation team, to see if it is economical to pursue further via litigation. If Debt Recoveries Australia and ADC Legal make a positive assessment to litigate the file, then the client will be contacted for their approval.
- Impact Damage to Roller Door
In this claim, only the tenant’s details and low-quality CCTV footage were provided at lodgement. When the tenant was contacted, it was discovered that they did not own this vehicle and was not the individual seen within the footage. Generally, the next step would be to conduct a search on the vehicle’s registration number. However, the resolution of the above footage is too low to make out the exact characters on the plate.
Building management had also changed since the incident date, but existing reports state the third-party vehicle was often parked in this spot. The current building manager has not seen this vehicle since they started. Further enquiries were made with the broker, but no additional information could be obtained. It was the same with the property agent, who also confirmed that the tenant no longer lives at this address and they no longer possess any records of if the tenant had any vehicles registered at the unit. Recovery prospects are currently uncertain.
If the vehicle’s registration number had been provided at claim lodgement, a lot less work would have been necessary, and the case possibly finalised within weeks if the vehicle was insured.
2. Expert and Authoritative Reports
In order to be successful in a recovery, the third party needs to be correctly identified. For instance, a faulty pipe might be identified as the origin of a leak, but recovery could only commence once it is determined whether the incident occurred due to a manufacturer’s defect or installation issue. Although there may be notes within the loss adjuster’s report regarding how the damage reportedly occurred, the proximate cause must be properly identified to commence recovery.
These investigations should be conducted as soon as possible after the incident occurs, while the evidence is still intact and available. As parts are often disposed of shortly after the assessment or repair, there have been numerous occasions where claims could not be recovered as the faulty part was no longer available to be assessed. Accordingly, it may always be valuable to obtain an independent expert’s report confirming the proximate cause if it is not clearly documented within the loss adjuster’s report.
Although these reports are another cost on top of the loss adjuster’s fee, the report fee is often recoverable and easier to recover than the adjuster’s fee.
Even if this fee results in being a sunk cost, it may still be worthwhile to obtain considering this report may be the deciding factor in a third party’s insurer’s decision to settle a claim. The loss adjuster should be able to provide basic recommendations on when the engagement of an expert may assist in the recovery.
In this instance the third-party insurer ended up paying after we had obtained an independent plumbing report confirming the part was faulty. If the assessor had obtained this report and provided it to the client, recovery could have been made much earlier on. It’s also very uncommon for the unit owner / strata manager to hold on to faulty parts for such a long time after being settled for the claim so it is vital we obtain this early on.
Examples of other reports from experts and authorities that will assist in the recovery process:
- Police Report
- Fire Brigade Report
- Forensic Report
- Electrical/Plumbing Report
Now that you can see the importance of early identification of strata insurance recovery losses, it’s important to then outsource to a strata insurance claims recovery specialist, such as Debt Recoveries Australia as soon as you can.
Need help? Contact Us.
If you prefer a professional to handle your case, outsource immediately to us here at Debt Recoveries Australia. We are experts at recovering outstanding debt and claims without the drama. For more information, email at us email@example.com or call 1300 799 511. Talk to us about your debt collection concerns via Skype at debtrecoveries.