What is strata insurance?
Strata insurance is a special type of property insurance designed for strata schemes such as apartment complexes, townhouse groups and sets of units. It covers all the common areas of a strata property, as well as the fabric of the building itself from the basement to the roof.
What does strata insurance cover?
The below diagram shows what is covered and what is not covered by residential strata insurance:
Strata insurance covers the building and common property around the building. The cover normally extends as far as the fences and driveways and includes separate buildings such as garages plus movable items like gardening equipment. To be included, the common areas and contents need to be defined in the title for the property.
Almost always, the property's body corporate (owners corporation) is responsible for taking out strata insurance over its common assets. These can include:
- Walls
- Roofs, guttering and roof terraces
- Balconies and windows
- Plumbing and wiring
- Floor and ceiling structures
- Stairwells and lifts
- Cellars and basements
- Communal laundries
- Managers' offices and concierge areas
- Water and sewerage connections
- Electrical sub-stations
- Entrance lobbies
- Common gardens
- Communal gyms and swimming pools
- Fences
- Carparks or carports.
Strata insurance also provides cover for liability for personal injury or damage to other people's property that happens on common areas.
What types of property can get strata insurance?
Any property that is on a strata title can take out strata insurance.
Strata insurance is versatile and can be applied to various types of properties, including:
- Apartment complexes
- Small groups of units
- Non-freehold townhouses
- Duplexes and homes with shared walls
- Low-rise boutique apartments
- Eco-villages
This flexibility makes it a suitable choice for a wide range of property arrangements, ensuring that all shared areas and structures are adequately protected.
What's not included in strata cover?
Personal items inside the apartment, such as furniture and household appliances are not covered by residential strata insurance, these would need to be covered by a contents or landlord insurance policy.
Optional extras
Unless already required by state law, it is possible to add on to standard strata coverage by including optional extras such as cover for volunteer workers, catastrophe cover, machinery and motor breakdown, office bearer liability, audit fees, fidelity guarentee and owners' improvements.
Flex Insurance specialises in strata insurance. We can offer standard policies that include only the mandatory cover that your state/territory strata law requires, or, using our expert underwriting knowledge, put together a policy that's tailored specifically to the needs of your property and the wishes of the strata owners. We also offer all inclusive cover, which includes all state/territory mandatory covers plus all optional inclusions for comprehensive cover.
What are some of the benefits strata insurance can provide for Property owners?
Strata insurance offers significant benefits for property owners; ensuring financial protection and peace of mind. Here are some scenarios in which strata insurance can be beneficial:
- Storm damage repair: A tree falls on and damages the roof and exterior. Strata insurance can help cover repair costs.
- Catastrophe cover: when a declared disaster strikes – like bushfire or cyclone – the costs of repairs sky-rockets because of demand for tradespeople or material. This cover allows for those increased expenses.
- Malicious Damage: Vandals damage shared facilities or steal items in common areas. Strata insurance may cover the cost of repairs and the replacement of stolen goods.
- Liability to others: A visitor slips and falls in a common area, leading to injury and lawsuit. Strata insurance helps cover legal fees and potential compensation.
- Machinery Breakdown: The building’s elevator breaks down, requiring expensive repairs. Strata insurance can help cover the cost of repairs and ensure common areas remain functional during this downtime.
- Legal disputes: If a legal dispute arises between any involved parties in the strata scheme, strata insurance can cover legal expenses.
Insuring a strata property in your state:
- Strata Insurance in QLD
In Queensland, strata insurance is referred to as "body corporate insurance." The maintenance and security of common areas are the responsibility of body corporates and community title schemes, as specified by the Body Corporate and Community Management Act 1997 (Qld).
Key components include protecting common areas, shared facilities, and the building structure itself. Additionally, body corporate insurance may provide liability coverage, protecting both the body corporate and individual unit owners from legal claims resulting from accidents or injuries occurring in communal areas.
- Strata Insurance in NSW
In NSW, strata insurance is governed by the Strata Schemes Management Act 2015 (NSW). It mandates coverage for building and common property, public liability, and worker's compensation. This includes the costs for any damage or repairs to residential strata properties as well as public liability coverage to protect against claims arising from accidents or injuries in common areas.
Under the Strata Act in NSW, it is a legal requirement for all Owners Corporations of a Strata Scheme to insure the building and maintain coverage under a contract of insurance against fire, lightning, explosion, and any other events specified in the policy.
- Strata Insurance in VIC
Victoria's strata insurance is regulated under the Owners Corporations Amendment Act 2021 (VIC). Known as "owners corporation insurance," it requires coverage for buildings and common property, including shared facilities and public liability.
The Owners Corporation (previously known as Body Corporation) must ensure the policy is adequate to cover the replacement and reinstatement value of the buildings and common property. Victorian strata insurance law also requires periodic reviews to maintain sufficient coverage levels, and the premiums are typically shared among lot owners through their owner's corporation fees.
- Strata Insurance in SA
In South Australia, strata insurance is regulated by the Strata Titles Act 1988 and the Community Titles Act 1996. This insurance is commonly known as "community corporation insurance" or "strata corporation insurance." It is mandatory for the corporation to insure buildings and common property for full replacement and reinstatement value, including public liability coverage.
Additionally, the policies must cover temporary accommodation costs if the properties become uninhabitable. As in other states, the costs are shared among lot owners through their community corporation fees.
- Strata insurance in WA
In Western Australia, strata insurance is governed by the Strata Titles Act 1985. It is known as "strata company insurance." This insurance must cover buildings and common property, including the structure and shared facilities, for their full replacement value.
Public liability insurance is also required to address potential risks in common areas. The strata company is responsible for maintaining adequate and up-to-date coverage, with premiums shared among lot owners through their strata fees.
Tips for choosing the right strata insurance provider
Before choosing strata insurance, assess the specific needs of your property. This includes the property’s characteristics, location, and facilities. It’s essential to shop around and compare quotes just as you would when looking for the best home or car insurance. Choose a reputable provider with a strong background in strata insurance. Looking at online reviews can help you gauge customer satisfaction and the quality of service offered by different insurers. An insurance provider that offers flexible coverage options can better accommodate the unique needs of your strata scheme, ensuring you get the protection you require.
FAQs
1. What is the difference between strata insurance and building insurance?
Strata insurance covers common property and shared facilities in a strata scheme, while building insurance typically covers an individual domestic or commercial property that is not part of a strata or body corporate scheme.Who is responsible for taking out strata title insurance?
The Owners Corporation or strata title owners are typically responsible for obtaining strata title insurance, which covers the building and common areas of their strata scheme.
2. Do I need contents insurance if I am a renter?
Yes, you will need contents insurance for your personal belongings in your strata unit, as strata insurance only covers the building and common areas, not personal contents.