When a sectional title insurance claim is approved, a common question is: should the insurer pay the owner, the contractor, the managing agent or the body corporate?
For good governance, claim payments should usually be controlled and properly recorded through the body corporate process, unless the insurer and body corporate have a clear reason to handle it differently.
Why payment control matters
The insurance policy belongs to the body corporate. The body corporate also needs proper financial records, proof of payment, excess recovery records and contractor invoices.
Risks of paying owners directly
- The body corporate may lose control over whether repairs are completed.
- There may be no clean financial record in the scheme accounts.
- Excess recovery may become difficult.
- Trustees may struggle to reconcile claim settlements and invoices.
- Owners may dispute shortfalls or claim outcomes later.
When contractors are paid directly
Some insurers or schemes may arrange direct contractor payments. Trustees should still keep copies of quotes, invoices, authorisations and settlement confirmations.
Best practice for trustees
- Keep the claim number and settlement confirmation.
- Record the gross claim amount, excess and net payment.
- Keep contractor invoices and proof of repair.
- Record any owner excess recovery.
- Make sure the managing agent can reconcile the claim.
Common questions
Can claim money be paid to an owner?
Sometimes, but trustees should be careful and ensure the payment is properly authorised, recorded and consistent with the claim arrangement.
Can the body corporate withhold payment until the excess is paid?
This depends on the claim process and scheme arrangements. Trustees should document the excess position clearly and act consistently.
What if the owner did the repair already?
The owner should provide invoices, photos and proof of payment. The insurer still needs to assess whether the claim is covered.