Owning a strata-titled property comes with specific responsibilities and obligations, especially when it comes to insurance. Understanding the difference between what the strata insurance covers and what you need to insure personally is essential for ensuring full protection of your property and assets. In Australia, strata insurance is a mandatory requirement for common areas, but individual lot owners may still need additional policies for their units and belongings.
In this article, we’ll explore how strata insurance works, its coverage limits, and when you need to arrange personal insurance.
What Is Strata Insurance?
Strata insurance is a compulsory type of insurance that provides coverage for shared spaces and common areas in a strata-titled property. This type of insurance is managed by the owners corporation (also known as a body corporate) on behalf of all property owners within the strata scheme. The cost of the insurance is included in the strata fees paid by individual lot owners.
Common areas covered by strata insurance may include lobbies, gardens, pools, gyms, driveways, and other shared amenities. Strata insurance ensures that these spaces are protected against risks such as fire, natural disasters, and public liability claims.
What Does Strata Insurance Cover?
Strata insurance generally covers:
- The building structure and shared spaces defined by the strata title.
- Common facilities such as driveways, elevators, pools, and gyms.
- Public liability for incidents that occur in shared areas.
- Building fixtures like plumbing, wiring, and flooring.
While strata insurance covers the common property and building structure, it’s important to note that it does not extend to individual lot owners’ contents or personal improvements made within their unit. This is where additional personal insurance may be needed.
Understanding the Role of the Owners Corporation
The owners corporation is a legal entity responsible for managing and maintaining the common property within a strata-titled building or complex. When a property is divided into two or more lots, the owners corporation is automatically created, and all lot owners become members.
The primary responsibility of the owners corporation is to secure and manage the strata insurance policy on behalf of all owners. While individual property owners do not need to arrange strata insurance themselves, they are required to contribute to its cost through strata levies.
What Strata Insurance Doesn’t Cover
It’s important to recognize the limitations of strata insurance. Individual property owners are responsible for securing their own insurance for:
- Contents and personal belongings inside their lot.
- Temporary fixtures or owner improvements, such as upgraded kitchens or bathrooms.
- Public liability within their own unit, which may require separate coverage.
If you have made significant improvements to your unit or own high-value personal items, obtaining personal insurance to cover these assets is essential.
Additional Insurance Policies to Consider
In addition to strata insurance, lot owners may want to explore the following types of coverage to ensure comprehensive protection:
- Contents insurance: Covers personal belongings and furnishings within the unit, protecting against damage or theft.
- Landlord insurance: Provides coverage for owners renting out their units, including protection against tenant damage and loss of rental income.
- Public liability within the lot: While strata insurance covers common areas, you may want to secure separate liability insurance for incidents occurring within your unit.
These additional policies can help ensure that you’re fully covered in case of unexpected events.
Strata Insurance Regulations Across Australia
While strata insurance is mandatory throughout Australia, the specific requirements vary by state and territory. Below is a summary of some key regulations:
- New South Wales: Under the Strata Schemes Management Act 2015, strata insurance must cover the building, common areas, and public liability (minimum of $20 million).
- Victoria: Governed by the Owners Corporations Act 2006, strata insurance must include coverage for buildings, common property, and public liability.
- Queensland: The Body Corporate and Community Management Act 1997 requires insurance for common areas, buildings, and mandatory coverage for specific events.
- Western Australia: The Strata Titles Act 1985 mandates insurance for all scheme assets with at least $10 million in public liability coverage.
- South Australia: The Strata Titles Act 1988 and Community Titles Act 1996 require coverage for buildings, common property, and temporary accommodation.
It’s essential to understand the regulations specific to your state or territory to ensure compliance.
Strata Insurance vs. Building Insurance
Although strata insurance covers the common property in a strata-titled building, it’s important to distinguish it from building insurance, which applies to standalone properties. Here’s how they differ:
- Building insurance covers the physical structure of a single property and is managed by the individual property owner.
- Strata insurance covers common areas and shared facilities in a strata-titled property, and it is managed by the owners corporation.
- In strata arrangements, the individual lot owner contributes to strata insurance through their strata fees, whereas for standalone properties, the owner arranges building insurance on their own.
This distinction is crucial for understanding your obligations as a strata property owner.
How We Can Help
At Duo Insurance, we specialize in providing customized insurance solutions for strata properties. Our experienced brokers have in-depth market knowledge and can offer expert guidance on securing the right coverage for your property. Here’s how we can assist:
- Expert advice: We provide tailored recommendations based on the unique needs and risks of your strata property.
- Customised solutions: We assess your property and find the most suitable insurance policies to ensure comprehensive protection.
- Competitive premiums: By comparing multiple insurers, we help you secure the best rates for your insurance needs.
- Claims support: Should you need to file a claim, we guide you through the process, ensuring a fair and timely resolution.
- Risk management: Beyond arranging insurance policies, we offer ongoing risk management advice to help you reduce potential claims and protect your investment.
Key Takeaways
- Strata insurance is compulsory in Australia and covers shared spaces and common areas.
- Property owners are responsible for obtaining additional coverage for contents, personal belongings, and any improvements made within their lot.
- Strata insurance legislation varies by state, so it’s important to be aware of your local requirements.
- An insurance broker can provide valuable expertise, helping you secure tailored coverage at competitive rates and offering claims support when needed.
Contact Duo Insurance today to ensure your strata property is fully protected.
