- Tony Foreshew
- Apr 5
- 2 min read
Understanding Insurances in Strata
What Type of Insurances Should a Strata Complex have?
What insurances should an owner consider?
When it comes to the insurances of a strata complex, it can be confusing as to what the strata insurance covers and why insurances owners and tenants should consider taking out.
What is Strata Insurance for a Strata Complex?
The Owners Corporation or Community Association is required to have insurances as defined under their respective legislation. The type of insurance cover that must be taken out is also outlined in the legislation, noting that some insurance companies will package insurances with optional additional cover items that are not mandatory, but which may be beneficial for your building.
Strata insurance typically covers common area contents, the building and shared property in the event of loss or damage. Generally, events like theft of common area contents, repairs to damaged property managed by the owner's corporation and the cost of recovery if disaster strikes are also included in strata insurance. It is also compulsory for strata insurance in all parts of Australia to provide liability cover in the event that people are injured on common property.
From time to time, some owners raise the question why strata insurance is necessary. To better explain this, it is no different to a house and insuring your house (structure) and its contents. In the event of an ‘incident’, and there is damage to your house, you have cover to ensure that the cost of the rectification of the damage or complete loss is covered by the insurance company.
Not having insurance means, if here is a loss or a complete loss you are not or injury, you are then liable for any costs and not the insurance company.
In many instances, a Owners Corporation / Community Association complex could be worth millions to re-build should there be a complete loss; or in the unlikely event that someone injures themselves while on the property, the Owners Corporation and Community Association would have public liability insurance. In short, the insurance for a strata complex is one of the most critical elements to consider.
Types of Insurance Cover
The compulsory insurance cover that is required (per the legislation) is:
Building
Loss of Rent (attached automatically to building insurance)
Public Liability (minimum $20,000,000)
WH & S (Not required if you do not directly employ any works and complex only used for residential purposes);
Other policy items that are usually consider include: Office Bearers Liability (Committee Members); Fidelity Guarantee, Machinery Breakdown, Voluntary Workers, Legal Expenses and more.
Insurances an Owner Should Consider
As owner should consider insurances outside of items not covered or required to be covered by an Owners Corporation / Community Association.
This includes:
Contents Insurance
Landlord Insurance
A tenant should also consider their own contents insurance as typically an owner renting their unit out, will only cover items such as flooring, window furnishings, paint etc. and not furniture or contents.
Insurance are complex and as such, if you require any assistance, it is best to contact your insurance provider.
The information contained in this newsletter is for your information only and is not financial advice. The information is per the legislation and/or comments provided for your consideration.
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