What owners need to know about the sectional title claims process

[Updated: 29 April 2025]

The sectional title claims process

The sectional title claims process is often misunderstood, which can lead to unnecessary conflict and unpleasantness. A solid understanding of how the process works goes a long way toward managing the expectations of both trustees and owners.

Trustees’ responsibility

Sectional title legislation places the responsibility of arranging and managing insurance with the body corporate and, as such, with the trustees. The owners still have certain rights and interests under the policy; however, with the body corporate being the insured person. This means that the owners may still claim for section damage, however, this is done via the body corporate, with claims being attested and signed off by the trustees.

Trustees should ensure that the buildings are insured for their full replacement value, including additional risks. They are also responsible for negotiating the premium, excess, and insurance rate on behalf of the body corporate. This negotiation, typically done annually, requires trustees to have a proper understanding of the scheme’s claims history and claims ratio.

The Prescribed Management Rules, specifically PMR 10, also state that no document signed on behalf of the body corporate is valid or binding unless signed by either two trustees or one trustee and the managing agent.

Call centres

Most of the geyser call centres work extremely well, improve speed, efficiency, prevent corrupt practices and improve client/owner experience. 

For non-geyser claims, we generally advise against owners using call centres to submit sectional title damage claims. This approach tends to bypass the managing agent and trustees, leaving them in the dark about the claims. It removes a layer of oversight and can leave the door open to fraudulent claims.

When a broker is used to submit a claim, it’s usually properly checked, the right process is followed, and forms are correctly completed, reducing the risk of a claim being repudiated due to incorrect or incomplete information. This ensures the best chance of a successful payout. Furthermore, claim resources such as online claim forms can better guide claimants through the process. It is a defined role of an intermediary to assist in the claims process.

These days, online claim submissions work extremely well with online forms, delivering PDF claims and supporting documents in seconds to the parties involved simultaneously. In other words, all nominated parties such as trustees, claims handler, broker, portfolio manager, etc., can receive the claim form instantly and acquit their part of the process. More recently, AI assistants are beginning to further assist in the online processing of claims.

Claims process

In the traditional paper-based process, owners wishing to submit a claim should complete the claim form and submit it to the trustees or managing agent, together with supporting documents, such as quotes, invoices, or relevant reports. The claim should then be validated (attested) and signed by the trustees before being submitted to the insurer, typically via the broker.

Online claims processes usually speed this up with submissions being received by all simultaneously, and the broker processing upon attestation.

Most policies require claims to be submitted within 30 days of the event.

If all documentation is in order and the process is followed correctly, straightforward claims can often be settled within 48 hours.

More complex claims may require the appointment of a loss adjuster. In these cases, contractors may need to verify quotes or resubmit specifications, after which the adjuster prepares a report for the insurer.

Once the process is complete, the insurer will either settle the claim in full, pay an adjusted amount, appoint their contractor to attend or reject the claim.

Claim disputes

As the body corporate is the insured party, any dispute arising from a rejected or adjusted claim needs to be addressed by the body corporate on behalf of the owner. Trustees are responsible for managing this process in the best interest of all owners. Owners, meanwhile, should be aware of their rights and the procedures available to resolve any disputes arising from such claims. A good broker can assist and mediate informally to help resolve claim-related matters.

It’s a good idea for bodies corporate to establish a clear claims procedure tailored to their needs and to communicate this to owners, so everyone knows how to proceed when an insurable event occurs.

Claimable vs non-claimable events

Damage that is sudden, unforeseen, and directly caused by specific events is typically claimable. These include:

• Fire, lightning, and explosion
• Wind, hail, storm, snow
• Burst pipe (not due to wear and tear)
• Burst hot water cylinder
• Impact (e.g. a vehicle hitting a gate or wall)
• Accidental damage (e.g. paint spillage on carpets)
• Flood or sudden water damage
• Damage resulting from a break-in

Conversely, damage resulting from gradual deterioration, maintenance issues, or wear and tear is usually not covered.

Examples include:

• Water ingress over time due to failing waterproofing
• Leaks during rain from a poorly maintained balcony
• Ceiling damage from slow leaks (e.g. bath trap or shower)
• Rusty or ageing pipes leaking through pinholes
• Cracked tiles and walls not linked to a specific event
• General damp or mould issues
• Rain damage due to improperly sealed windows
• Poor workmanship
• Roof tile dislodging and damaging a vehicle
• Damage to the contents inside a unit
• Tree roots growing into pipes
• Uninsured building elements (e.g. thatch, awnings, signage, certain glass fronts, garden features, wooden decks, balustrades)

Theft of building elements on the outside, such as copper pipes, gate motors, cameras, or air conditioning parts, is not automatically covered. Trustees and owners should clarify what theft-related cover is included in their policy.

Third parties and liability cover

The policy protects the body corporate, not third parties or tenants. If an owner or tenant suffers damage to their personal property, the policy will only respond if the body corporate is legally liable for that damage. Third-party approaches in respect of damages to their property or injuries sustained where the body corporate is being held liable should be referred to the schemes broker immediately.

A clear understanding of the claims process helps avoid conflict and ensures smoother outcomes. Owners, trustees, managing agents, and insurance brokers each have a role to play; by following the correct channels and involving the right people, claims can be handled fairly, quickly, and with minimal fuss.