Non-Strata vs Strata: How Insurance Actually Differs for a Block of Units

The difference between strata and non-strata insurance for a block of units comes down to who’s responsible for the building. In a strata scheme, the owners corporation arranges one collective policy covering the building and common property on behalf of every lot owner. A non-strata block has no owners corporation, so that collective policy doesn’t exist. The single owner arranges a block of units policy covering the whole structure themselves.

That difference plays out in practice through two clear examples: a block that’s fully residential and a block with commercial tenants mixed in. Here’s how strata and non-strata compare in each case and what a strata policy actually includes once state law and market practice are factored in.

Residential Strata vs Non-Strata for a Block of Units

In a residential strata scheme, the owners corporation arranges one collective residential strata policy covering the building and common property on behalf of every lot owner, funded through levies.¹ A non-strata block has no owners corporation, so that collective policy doesn’t exist. The single owner arranges a block of units policy covering the whole structure themselves.

What does a residential strata policy actually cover?

Beyond the building itself, a standard residential strata policy generally covers:

• Common area contents such as lifts, driveways, gardens and shared facilities
• Public liability for incidents in common areas
• Office bearers’ liability for committee members acting in their strata role
• Voluntary workers cover for unremunerated committee volunteers
• Machinery and equipment breakdown for plant such as elevators and fire systems

None of this reaches inside an individual lot. Contents, fixtures an owner has added and anything specific to a tenancy sit with landlord or contents insurance instead, not the strata policy.

What the policy has to include isn’t left entirely to the committee’s judgement either. Each state sets its own minimum. They genuinely differ from one another.

State	Minimum public liability	Other requirements
New South Wales	$20 million2	Building insured to full reinstatement value. Work health and safety insurance required if the scheme directly employs workers.
Victoria	$20 million3	Reinstatement and replacement value building insurance required. Prescribed owners corporations must obtain a valuation of the buildings they insure every five years.
Queensland	$10 million4	Common property and body corporate assets insured at full replacement value. Office bearers liability is available as additional cover, not mandatory.

Queensland’s minimum is half of what New South Wales and Victoria require. If a building or a portfolio spans more than one state, this isn’t a detail to assume is the same everywhere.

How does that compare with a non-strata block of the same size?

	Residential strata (owners corporation)	Non-strata block (sole owner)
Who arranges the policy	The owners corporation, on behalf of every lot owner	The one owner, directly
Minimum public liability	Set by state law, $10 million to $20 million depending on the state	No state-mandated minimum. Set by what the market and any lender require
Who pays	Split across owners through strata levies	The one owner, in full
Committee or decision-maker exposure	Office bearers liability is a real, separate exposure for the committee	Not applicable. The owner makes the decisions and carries the risk directly
Underinsurance risk	Shared, subject to an independent valuation cycle in some states	Sits entirely with the one owner, with nobody else checking

Our guide to non-strata unit block insurance covers what shapes whether an insurer will take on a non-strata risk. Block of units insurance cost breaks down what that responsibility actually costs.

Commercial Strata vs Non-Strata for a Block of Units with Commercial Tenants

Once a building includes a genuine commercial tenancy, a ground-floor shop, café or office alongside residential units, the residential comparison above no longer applies cleanly. A different threshold decides which policy is needed.

Market practice generally treats around 20% of a building’s floor space in commercial use as the point where a scheme moves from a residential strata policy to a commercial strata policy instead. Below that broad threshold, a residential strata policy commonly still applies with the commercial tenancy noted on it. Above it, commercial strata insurance is generally required for the whole scheme. This figure varies by insurer, so it’s worth confirming against your specific building rather than assuming an exact cut-off.

For a non-strata block with a commercial tenant, a block of units policy is built around residential tenancies and generally isn’t the right fit once a genuine commercial tenancy is in the mix.⁵ Rather than layering a second policy on top, the whole building is typically insured under one business pack, commercial property or bespoke property policy instead, covering the residential units and the commercial tenancy together.

	Commercial strata (owners corporation)	Non-strata block with commercial tenants
When it applies	Roughly 20% or more of floor space in commercial use, varying by insurer	No owners corporation exists, regardless of tenant mix
Who arranges it	The owners corporation, for the whole scheme	The sole owner, generally under one business pack, commercial property or bespoke policy
What’s covered	Building, common property and public liability, on broadly similar terms to residential strata	The whole building, residential and commercial portions together, under a single commercial-style policy

This is a common blind spot for owners of older shop-top housing, where the building has always functioned as mixed use but the insurance has never been reviewed to reflect it properly.

If you own one lot in a strata scheme

This is a different question again to insuring the whole scheme. The owners corporation already insures the building and common property, so you can’t take out a separate building policy over the same structure. You don’t need to. What you’re responsible for is your own lot.

That’s where landlord insurance comes in if you rent the unit out. It covers loss of rent, tenant damage inside your unit and your liability as landlord. See our full breakdown of landlord insurance vs building insurance for exactly where that line sits.

Key Takeaways

If you’re not sure which situation applies to your building, Cipher can review it with you and find the right cover or combination of covers. Get in touch.

The information in this article is general in nature and does not constitute legal, financial or insurance advice. Please speak with a qualified adviser about your specific circumstances.

Footnotes

1. Strata, NSW Government ↩

2. Managing strata finances and insurance, NSW Government ↩

3. Insurance for owners corporations, Consumer Affairs Victoria ↩

4. Compulsory insurance, Queensland Government ↩

5. Types of business insurance, business.gov.au ↩