This article about insurers appointing their own legal representative to defend proceedings in Victoria has been supplied by Richelle Berman, R Berman Lawyers.
It has become usual practice for an insurer to appoint their own legal representative to take over the conduct of a proceeding where the Owners Corporation has been sued and has issued a claim on its insurance policy for coverage of its legal expenses. It is imperative to remember that any sum of money required to be paid out by the owners corporation does not come out of the insurer’s pockets. The extent of the insurer’s liability is only to cover the owners corporations legal costs up to a certain amount.
Here lies a clear conflict of interest.
GET NOTIFIED WHEN WE PUBLISH NEW Q&As, NEWS AND ARTICLES TO THE SITE
An insurer interested in spending the least amount of legal costs and an owners corporation relying on the advice of a legal representative, paid for by the insurer, to advise the owners corporation on whether it should settle/how much it should pay or whether it should pursue the matter and potentially have its costs recovered as part of the proceeding.
This doesn’t sit well with me.
Who is to say that the owners corporation won’t be advised to pay a sum of damages greater than what it should in order to bring the proceeding to an end to minimise the amount paid out under the insurance claim by the insurer? Who is to say that an owners corporation will be advised not to pursue a matter, not on the merits of their defence, but on the likelihood of costs being recovered by the insurer?
So what should your owners corporation’s do?
As with any insurance claim- fight for what the owners corporation wants! Owners Corporations can insist upon electing their own representative. I wouldn’t take my car to a repairer elected by my insurance company so I certainly wouldn’t be using a lawyer appointed by my owners corporation’s insurer.
Richelle Berman
R Berman Lawyers
Email: [email protected]
Phone: 03 9077 1177
This post appears in Strata News #402.
Have a question about insurers appointing their own legal representative to defend proceedings in Victoria or something to add to the article? Leave a comment below.
Read next:
- VIC: Q&A Underinsurance, Building Sum Insured and Strata
- NAT: Q&A Yearly Increases To Strata Insurance
- VIC: Q&A Airbnb neighbour flooded my apartment and damaged my goods
The information contained in this article is general information only and not legal advice. The currency, accuracy and completeness of this article (and its contents) should be checked by obtaining independent legal advice before you take any action or otherwise rely upon its contents in any way.
Visit Strata Insurance OR Strata Title Information Victoria.
Looking for strata information concerning your state? For state-specific strata information, try here.
After a free PDF of this article? Log into your existing LookUpStrata Account to download the printable file. Not a member? Simple – join for free on our Registration page.
Keep in mind though that if the OC is being Sued potentially due an overreach of the OC duties or a breach of the Act itself and l were the Insurance Company then l would absolutely NOT want the OC to also appoint their own Legal representative as they might not act in the best interest of the Lot Owners but their own interests. The other crucial point is that if the OC were to be found Negligent then the Insurer may not cover the legal case at all.