Navigating the minefield that is strata insurance

building maintenance and strata management act
Posted on Posted in News, Strata Compliance, Strata Management

Chick on Computer on Sofa1. What is Strata Insurance?

Strata Insurance is designed to protect you and your property as a lot owner. It provides general insurance cover for common property under the management of a strata title or body corporate entity. The premiums for strata insurance are typically shared amongst the lot owners as part of their strata fees and levies.

2. Is Strata Insurance mandatory?

Holding strata insurance is mandatory under each state’s relevant strata legislation. However, each state and territory has different legislative requirements that deal with insurance for strata title properties. You should always check that your insurance meets those legislative requirements. If your property is professionally managed, your Strata Manager will usually arrange this insurance on your behalf.

3. What is covered under a Strata Insurance policy?

Strata Insurance policies cover material damage as a result of insured peril to structural fixtures including fixed plant, machinery and underground services. These policies also provide cover for owners’ fixtures, fittings and improvements which form part of the building. Some of these items may include built-in ovens, stovetops, kitchen cupboards, hand basins, baths and showers.

Common Policy Features include:

  • Public Liability | Covers the legal liability of the Owners Corporation. This does not insure the liability of the unit owner, except where liability relates to the Owners Corporation’s property or common contents.
  • Common Contents | Covers appliances, equipment, furniture, fittings and works of art in any common area for which the Owners Corporation is responsible.
  • Loss of Rent and/or Alternative Accommodation | If a unit becomes uninhabitable as a result of an insured peril, the unit owner can claim for loss of rent or alternative accommodation during the period that the premises are unfit for occupancy, based on the rental value of a unit.
  • Personal Accident for Voluntary Workers | Provides compensation to any person who voluntarily works on behalf of the Owners Corporation. The volunteer worker’s name must be recorded in the books of the Owners Corporation. This is a compulsory insurance under NSW Strata Legislation.

4. What is not covered under a Strata Insurance policy?

Strata Insurance specifically excludes contents within individual units such as carpets, curtains, blinds, light fittings and electrical appliances not actually wired into the premises. These items should be insured by your Contents Insurance or Landlord Insurance policy.

5. Does the Owners Corporation need to get a valuation on the building?

The law requires that buildings are insured for their full replacement and reinstatement value at the time of the loss, not at the time when the insurance policy was first taken out. Whitbread recommend that the Owners Corporation obtain a professional property valuation every three years.

6. What if I rent out my strata property?

Strata Property owners who rent out their property need to purchase Landlord Insurance as a separate policy to the Strata Insurance. Landlord Insurance provides insurance protection for your liability as a Landlord. In addition, the insurance provides for Landlord’s contents, loss of rent by an insured peril and other benefits.

7. What if I live in my property?

As an owner occupier of a property, you should arrange cover for your furniture, personal contents, jewellery, collections and other special items. Personal Contents Insurance policies provide legal liability protection for any damage to third party property or third party injuries that may occur anywhere in Australia.

To get a health check on your strata insurance (for free!) go to Whitbread Insurance Brokers. They help self-managed strata schemes obtain insurance by obtaining competitive quotes on your behalf. Go to their Self-Managed Strata webpage and obtain a quote online or speak to one of their insurance specialists.

(Disclosure: Our Body Corp receives a commission of $100 for every successful referral to Whitbread Insurance Brokers.)

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