Are your Strata clients often confused about Strata Insurance, what it covers, and the other insurance policies they need in place to protect their assets? Below we answer the most common questions we get asked on Strata Insurance, to help you guide your clients through this often confusing area of insurance.
1. What is Strata Insurance?
Strata Insurance is designed to protect the properties of lot owners in a strata building. It also 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, it is important to note that each state and territory has different legislative requirements regarding insurance for strata title properties. It is important to confirm that your clients’ insurance meets those legislative requirements.
3. What is covered under a Strata Insurance policy?
Strata Insurance policies cover material damage as a result of an 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, carpets, 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, and subject to approval by the insurer.
- Personal Accident for Voluntary Workers | Provides compensation to any person who carries out voluntary 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 a Contents Insurance or a Landlord Insurance policy.
5. What is the recommended level of Public Liability Insurance for a Strata property?
In Australia, different states have different statutory requirements for Public Liability Insurance when it comes to Strata properties.
As of November 30, 2016 the minimum Liability Insurance statutory requirement for NSW Strata property entities increased from $10,000,000 to $20,000,000. Therefore, $20,000,000 is the minimum level of Public Liability Insurance we recommend.
Other states & territories
In all states and territories (excluding NSW), the statutory requirement and minimum level of Public Liability Insurance required for each Strata property entity is $10,000,000. It should be recognised however, that the standard liability limits currently offered with domestic home and contents insurance is between $20,000,000 and $30,000,000. Accordingly, we recommend that the Strata property is always insured for a minimum of $20,000,000 liability.
If you are unsure on this and would like to discuss Public Liability limits for your clients’ Strata entity, please call your Resolute Property Protect Insurance Broker to ask for advice specific to the situation.
6. 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. Resolute recommends that the Owners Corporation obtain a professional property valuation every three years.
7. What if my clients rent out their 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 their liability as a Landlord. In addition, the insurance provides for Landlord’s contents, loss of rent by an insured peril and various other benefits.
8. What if my clients are living in their property?
Owner occupiers of a strata property, should arrange a Contents Insurance policy. This will provide cover for their furniture, personal contents, jewellery, collections and other special items. In addition to this, Contents Insurance policies provide legal liability protection for any damage to third party property or third party injuries that may occur anywhere in Australia.
If you require any information about how your clients are covered under a Strata Insurance policy, including optional extras available, please contact one of Resolute’s specialist strata insurance brokers on 1300 668 033, or via email firstname.lastname@example.org.
This insight article is not intended to be personal advice and you should not rely on it as a substitute for any form of personal advice. Please contact Resolute Property Protect ABN 53 157 850 827 Licence Number: 425 966 for further information, or refer to our website.
*Typical building contents replacement costs are provided by Sum Insured Pty Ltd (A.B.N. 55 947 630 521 (‘SI’) trading as Home Contents. Whilst every care is taken to ensure the accuracy of the information as a guide for costing, no responsibility is accepted by SI, Steadfast or the Steadfast Broker for its accuracy. Please check with a Valuer or other suitably qualified professional for an accurate estimate. Neither Steadfast nor the Steadfast Broker takes any responsibility for the costs provided by SI, or any liability for the accuracy of or reliance upon or use of, the costs. To the fullest extent permitted by law, SI, Steadfast and the Steadfast Broker expressly disclaim all warranties, express or implied, including, but not limited to, the implied warranty of fitness for a particular purpose. SI, Steadfast and the Steadfast Broker do not warrant or make any representations regarding the use or the results of the use of the information provided in terms of its correctness, accuracy, reliability, or otherwise.