Do I need building insurance in a strata unit?
Date published: 19 July 2023, updated 4 September 2024
Are you paying for insurance you don't need?
If you own an apartment or individual unit in a strata property, you don't need to take out separate building insurance for your lot. Your body corporate/strata corporation will organise this.
However, if unit owners want to protect their personal belongings, they should consider taking out contents or landlord insurance. That's because items within the unit are generally not covered by the body corporate's strata building insurance.
In every state and territory, it is mandatory for almost all* body corporates and owner or strata corporations to hold adequate building insurance for their property, such as the specialist cover offered by Flex.
This means that individual unit owners shouldn't need to take out their own building insurance, as the building is already covered for repair and reinstatement costs and public liability claims.
What does the strata building insurance cover?
Laws vary by state, particularly for liability coverage. However, all of them require the body corporate to take out insurance to cover the cost of damage or repairs to buildings and common areas. This also includes public liability insurance for personal injury or property damage on common property, such as car parks, driveways, entryways, stairwells, and lobbies.
What does the strata building insurance not cover?
A popular rule of thumb is that 'strata insurance stops at the apartment door'. This means that everything within your unit (other than some permanent fixtures such as stoves, toilets, bathtubs etc) must be covered separately, by the unit owner. If you live there, then 'contents-only' insurance is likely to be what you need, whereas good landlord insurance should cover you if you're renting it out.
There is an exception to this 'rule', however, when a defect in the building fabric (e.g. a leaking pipe in a ceiling cavity) causes damage in a unit. In such cases, individual owners may be able to claim repair costs through the strata building insurance. This can be a grey area though, so it's handy to check with your strata committee every time the insurance policy is renewed.
Is the building insurance adequate?
CPI, labour costs and rises in cost of materials has spiked in recent years and as a result, underinsurance has become a major issue for strata property owners. Requirements within the state and territory legislation are only starting points, and if damage, disaster, injury or even fraud or theft occur, unit owners may still be left with a hefty bill to cover any shortfall.
That's why it's important for you, as an owner, to check the cover taken out by your body corporate committees, and raise concerns if you think it leaves expensive gaps or that the sum insured needs to be adjusted.
For example, standard cover doesn't usually include machinery breakdown such as for lifts or pumps - but these can be expensive to fix. Legal costs to defend a claim or appeal an order are also not covered, nor is worker or volunteer injury cover unless it is stipulated by state law.
Flex strata insurance is tailored to each state, so that specific requirements are met, for example in NSW, voluntary worker cover is automatically included in policy in that state as it's a legal obligation under NSW law.
So, in short, body corporates must take out insurance for the building and common property, whereas individual unit owners are wise to purchase contents-only or landlord insurance - that way, both inside and outside of your apartment are covered.
Building insurance for strata units in different states
Building Insurance for Strata Units in Different States
Strata insurance, also known as body corporate insurance in Queensland, typically includes protection against structural damage to the building, common property, and shared assets. It also covers incidents like fires, water damage, vandalism, and natural disasters. Additionally, it may include liability cover.
In Queensland, sections 197 and 206 of the Body Corporate and Community Management (Standard Module) Regulations 2020 require body corporates to have strata insurance that covers:
- Repair or replacement of the building and common property due to damage
- Public liability for injury or property damage on common property
Optional coverage can also include theft, fraud, machinery breakdown, committee indemnity, and injury to workers or volunteers.
Under NSW law (the Strata Schemes Management Act 2015 (NSW) and other legislation) some aspects will be automatically covered by your residential strata insurance. This includes insurance for your residential property, such as damage or repairs to buildings and common areas like structural floors, ceilings, balconies, external walls, windows, entries, and stairwells. It also covers liability and voluntary workers cover.
Optional coverage can include theft, fraud, machinery breakdown, or committee indemnity.
In Victoria, the Owners Corporation Act 2006 requires strata insurance (also known as body corporate insurance) for:
- Repair or replacement of the building and common property
- Public liability for injury or property damage on common property
Optional coverage can include theft, fraud, machinery breakdown, committee indemnity, and worker or volunteer injury. These requirements are maintained under the Owners Corporations Amendment Act 2021.
Strata insurance, also known as body corporate cover in South Australia, is a mandatory form of insurance required by law under the South Australian Strata Titles Act 1988. Under this Act, it is required that the strata corporation take out strata insurance to cover:
- The repair or replacement of the building and common property in the event of damage
- Public liability claims for personal injury or personal property damage that happens in connection with the strata’s common property
- Fidelity guarantee against fraud
Owners corporations can also take out optional cover to include such things as machinery breakdown, committee indemnity, and injury suffered by volunteers.
In Western Australia, body corporates and councils of owners in WA must obtain strata insurance to cover damage or repairs to common property, structures, fixtures, fittings, and common area contents. This insurance also includes public liability and voluntary workers' compensation.
According to sections 83 of the Community Titles Act 2018 and 97 of the Strata Titles Act 1985, strata insurance must cover:
- Repair or replacement of the building and common property
- Public liability for personal injury or property damage on common property
Optional coverage can include theft, fraud, machinery breakdown, committee indemnity, and injury.
*In some states, very small (usually two or three unit) strata properties are exempt from mandatory insurance, though it can still be very valuable to have it.
What are the mandatory strata insurance requirements
Strata insurance is required if you own a strata property in Australia. It is the responsibility of the body corporate/owner corporation to ensure key coverage. While requirements vary by state and territory, typically all must include public liability insurance for the strata complex.
Generally, all states require a minimum coverage that includes repair and replacement of the building, in addition to public liability insurance. This ensures that both the physical structure and any potential liabilities are adequately protected.
Most insurers, such as Flex Insurance, offer optional extras for your policy including Voluntary Workers (optional in all states except NSW), Fidelity Guarantee Insurance (optional in all states except SA), Office Bearers Liability, Machinery Breakdown, Government Audit Costs and Legal Expenses, Lot Owners Fixtures and Improvements and Catastrophe Insurance This helps to ensure adequate insurance for your strata title property.
FAQs
At what point do you need building insurance?
You need building insurance if your property or strata unit isn’t fully covered by the body corporate’s policy. It protects against loss or damage from events like storms, fires, or burglaries and includes legal liability, loss of rent if a tenant’s unit becomes uninhabitable, and temporary accommodation if your unit is unlivable.
Do I need contents insurance if I have a body corporate Australia?
Yes, if you own an apartment or individual unit in a strata scheme, you should consider personal contents insurance, as the body corporate’s insurance typically does not cover individual contents.