Importance of Risk Recommendations In Insurance – The cost of not acting

WA legislation (the Strata Titles Act 1985 (WA) and other legislation) requires businesses and property owners’ councils to carry certain minimum levels of insurance.

Strata managers and the Council often receive Risk Recommendations as part of a survey carried out at the property and need to consider completing the work requiring attention.  These recommendations are to be completed at the expense of the owners corporation. Recommendations can be in high, medium or low categories.

Regarding Risk Recommendations the insurers cannot enforce these items, but it may impact future premiums, excesses, and their appetite to continue covering the risk if they are not implemented.

For example, an insurer may state on their risk recommendations that “A professional fire protection company should be engaged to assess and advise on the entire site for improvements to fire safety in accordance with Australian Standards AS1851 and that it is an ongoing requirement that the Owners Corporation ensure all Essential Services, including but limited to, Fire Extinguisher’s, Fire Hose Reels, Fire Hydrants etc., are regularly maintained in accordance with the “Essential Services” requirements of the Building Regulations 2006. 

It is essential that these requirements are adhered to, to ensure that a claim is not prejudiced as a result of any loss/damage or injury subsequently occurring. 

A decision by the Strata Company to not act is still a decision, and it has costs of its own. If rectification projects are delayed – the inescapable further deterioration of the strata property will lead to extra costs. If a quote expires, you can anticipate the new quote will be greater.

Need help? We can assist you, please contact us at sslipper@avoca.com.au for all your Strata enquiries, demands, probes and doubts.