If you own a strata property in Australia, you need to understand the insurance requirements and when you need to arrange your own insurance versus when the strata insurance applies.
This article will delve into what strata insurance does and doesn’t cover, how it differs from building insurance, and what additional policies you may need as a strata property owner to ensure full coverage.
What is Strata Insurance?
Strata insurance is a compulsory type of insurance that covers the common and shared areas in a strata-titled property. It is arranged by the owners corporation—or body corporate—on behalf of all lot owners. Meanwhile, property owners pay the insurance premium as part of the strata fees.
What is An Owners Corporation?
An owners corporation—also known as a body corporate in some states—is a legal entity that manages and maintains the common property in a strata-titled building or complex.
It is created by default when a property is subdivided into two or more lots, such as apartments, townhouses, or commercial units.
The owners corporation is liable for obtaining and maintaining the mandatory strata insurance policy on behalf of all lot owners. As a property owner in a strata scheme, you automatically become a member of the entity.
When is Strata Insurance in the Property Owner’s Name?
Strata insurance is maintained under the name of the body corporate rather than being registered in the name of individual property owners.
When lot owners buy a property in a strata scheme, they automatically become a members of the owners corporation.
Since the owners corporation is responsible for securing and upholding the strata insurance policy for all lot owners, it is held in the body corporate’s name—not individual property owners.
However, as a lot owner, you are still required to contribute to the cost of strata insurance through your strata fees. The premium is split among all lot owners based on their unit entitlements.
When Does Strata Insurance Apply?
Strata insurance can be applied as soon as the strata plan is registered.
The owners corporation is responsible for getting and managing the strata insurance policy for all lot owners. Premiums for the strata insurance are paid by lot owners through their strata levies.
It’s important to note that strata insurance is compulsory for all strata properties in Australia. Each state and territory has its own strata legislation that requires this type of insurance.
From the moment a property is strata titled through the registration of the strata plan, the insurance policy arranged by the owners corporation takes effect to provide the required insurance for that property and its common areas.
Individual lot owners don’t need to worry about getting this insurance as it’s done at the strata scheme level and paid through strata fees.
What Does Strata Insurance Cover?
Strata insurance covers the following:
- The building structure and common areas as defined on the strata title
- Shared facilities like driveways, pools, gyms etc.
- Public liability in common areas
- Building fixtures like plumbing, wiring and some flooring
What Strata Insurance Doesn’t Cover
It’s important to understand that strata insurance doesn’t cover everything in the strata property.
Property owners are responsible for insuring the following:
- Contents and personal belongings inside their lot
- Temporary fixtures and owner improvements like renovated kitchens or bathrooms
- Public liability inside the lot which may require separate coverage
When to Get Strata Insurance?
Strata insurance policies are issued for a 12-month period and expire at 4 PM on the expiry date. The owners corporation must ensure the policy is renewed before the expiration date to avoid any gaps in coverage.
It’s recommended the owners corporation to do the following:
- Review the strata insurance policy annually to ensure adequate coverage
- Get a professional valuation of the property every few years to determine the correct sum insured
- Get quotes from multiple insurers to get the best coverage at the best price
Individual lot owners don’t need to get the strata insurance policy themselves. However, they should still carry out duties such as:
- Understanding what’s covered under the strata policy and what additional insurance they may need
- Getting contents insurance and landlord insurance (if applicable) as soon as possible to ensure their personal belongings and investments are always covered.
Strata Insurance Regulations By State
While strata insurance is compulsory across Australia, each state and territory has its own legislation requirements. Here’s a summary of the strata insurance regulations in each state:
| State | Key Strata Insurance Requirements |
| NSW | Regulated by the Strata Schemes Management Act 2015. Must cover building, common areas, public liability ≥$20M |
| VIC | Governed by the Owners Corporations Act 2006. Required to insure buildings, common properties, public liability |
| QLD | Body Corporate and Community Management Act 1997 mandates insurance for common areas and building, with added requirements like mandatory coverage for specific events |
| WA | Strata Titles Act 1985 requires strata companies to insure all scheme assets for replacement value, with ≥$10M liability coverage |
| SA | Strata Titles Act 1988 and Community Titles Act 1996 require “community corporation insurance” for buildings, common areas, temporary accommodation |
How Strata Insurance is Different to Building Insurance
While strata insurance covers the common property in a strata scheme, building insurance is for individual freestanding properties and is not part of a strata arrangement.
Here are their differences:
- Building insurance covers the physical structure of one property, not shared areas.
- Strata insurance is for properties under a strata title and includes coverage for common areas and public liability.
- The individual property owner arranges building insurance, while strata insurance is managed by the owners corporation.
Additional Insurance Lot Owners Can Add to Their Strata Property
To ensure their strata property and personal belongings are fully covered, lot owners may want to consider the following:
- Contents insurance: This covers personal belongings and furniture inside the strata unit, giving property owners peace of mind.
- Landlord insurance: Landlord insurance adds extra protection against tenant damage and loss of rental income, which is especially vital for property owners who plan to rent out their units.
- Public liability inside the lot: As strata liability stops at the front door of the lot, property owners may want to get a separate cover for incidents that occur within their unit.
How Duo Insurance Can Help with Strata Insurance for Your Property
Engaging an experienced insurance broker from Duo Insurance can be beneficial when acquiring strata insurance for your property. Here’s how we can assist:
- Expertise and advice: Our insurance brokers specialise in strata insurance and have in-depth market knowledge. We can give expert advice on the right level of coverage for the property owner’s specific strata property so they have enough protection.
- Customised insurance solutions: We assess the strata property’s unique risks and needs and create an insurance solution that addresses those issues. Our brokers can assist in finding the best strata insurance policies for you.
- Competitive premiums: With access to multiple insurers, we can compare policies and negotiate premiums on a property owner’s behalf.
- Claims support: For those who need to make a claim, a strata insurance broker can be invaluable. We can help with documentation, advocate for you, and work to get your claim settled fairly and quickly.
- Risk management advice: Beyond arranging tailored insurance policies, Duo Insurance offers risk management advice to help property owners mitigate risks and reduce claims. Identifying and addressing issues early can help protect your strata property in the long term.
Contact us to get your strata property protected with the right insurance coverage.
Key Points
- Strata insurance is compulsory in Australia and starts from the day the strata plan is registered.
- Strata insurance doesn’t cover contents in individual lots or owner improvements.
- Lot owners can add contents insurance and landlord insurance for extra cover.
- Strata insurance legislation varies slightly between states and territories.
- Strata insurance covers the building, common property and public liability in shared areas.
- Owners corporations should review and renew the strata policy every year, with regular property valuations to determine the sum insured.
- An insurance broker from Duo Insurance can offer expertise, customised cover, competitive premiums, claims support, and risk management advice.