Strata insurance (also known as body corporate cover) is general insurance that covers common property under the management of a strata title or body corporate entity. Strata Insurance policies generally cover material damage as a result of a unforseen damage to structural fixtures including fixed plant, machinery and underground services.
Under the Victorian State legislation, the Owners Corporations Act 2006, holding strata insurance is compulsory.
What does it cover?
Strata insurance generally covers common or shared property as defined on the Plan of Subdivision title of the property. This might include common areas, lifts, pools, car parks, gardens, wiring, balconies, walls, windows, ceilings, floors and drive ways. They also generally extend to provide cover for proprietors’ fixtures, fittings and improvements which form part of the building. Some of these items include built-in ovens, stovetops, kitchen cupboards, hand basins, baths, showers and spas and pools in common areas.
Strata insurance must provide public liability cover in the event people are injured on common property regardless of the purpose of the visit.
There are restrictions to the policy expressed as exclusions and each insurer has different clauses and policy terms and conditions for certain risks, such as landslides or flood etc.
Being warned with the fact that strata policies do not cover your contents and personal items each resident should take out an appropriate contents cover for your belongings. Strata Insurance specifically excludes contents within individual units such as carpets, curtains, blinds, light fittings.
What factors contribute to the premium?
This may include:
- Government taxes on insurance (stamp duty and GST)
- The age and condition of the building
- The replacement cost of the building
- The risk profile of the location
- The claims history of the strata complex
- Commercial activities carried out on the premises, such as holiday letting
- The level of excess payment selected by the body corporate, payable at the time of a claim
- The costs of common property, for example car parks, stairwells, fire protection systems, lifts and pools. The excess is determined by the Owners Corporation and the Annual General Meeting.
Property features such as pools, ornaments and car stackers can be very expensive to repair.
Older buildings constructed before the introduction of cyclone building codes are at even greater risk of damage and are increasingly falling below the underwriting criteria of some insurers. Insurers are required to operate in a financially prudent manner under Australian law.
The law requires that buildings are insured for full replacement and reinstatement value. We recommend that you obtain a professional valuation which will be arranged on request.
Flood cover may be requested by strata owners, however insurers will assess their willingness to offer flood cover based on the location of property and the proximity of rivers, lakes and dams. This extension of cover, if granted, will attract an additional premium.
We recommend that unit owners purchase Landlord Insurance as separate policies to the Strata Insurance. Landlord Insurance provides insurance protection for your liability as a Landlord and secondly for Landlord’s contents, loss of rent by an insured peril and other benefits.
Personal Contents Insurance policies provide legal liability protection for any third party injuries or damage to third party property that may occur anywhere in Australia. If you are a tenant, your Contents and Public Liability are not covered by the Landlord’s Insurance policy. Tenants should arrange their own Contents Insurance.
Prompt notification of any fire, accident, theft, malicious damage or injury to your manager for advice and for the procedures for lodging a claim.
A nominal fee applies for a Certificate of Currency depends on the urgency.
Personal Accident for Voluntary Workers
Provides compensation to any person who voluntarily works on behalf of the Owners Corporation committee.
Protection for the Owners Corporation committee against fraudulent embezzlement or fraudulent misappropriation of the Owners Corporation committee’s funds and tangible assets. This is an optional cover and an additional premium will apply.
Protects the members of the committee where liability has arisen from an alleged or wrongful act, omission or breach of duty. Covers the liability and legal costs up to the sum insured. Fraudulent acts are not insured under this insurance policy. This is an optional cover and an additional premium will apply.
Provides cover for sudden or unforeseen physical destruction/damage to machinery. This is an optional cover and an extra premium will apply.
Provides an additional sum where the building is considered a total loss or partial loss due to catastrophe where a state of emergency is declared such as an earthquake, bushfire, tsunami or cyclone. Catastrophe cover is a specialised policy feature and should be discussed by the Owners Corporation at the AGM.