Residential Strata
Insurance.

Residential strata insurance is a policy arranged by an owners corporation or body corporate to cover the shared building and common property of a residential strata scheme. It covers the physical structure of the buildings, common area contents, public liability in shared areas and other covers relevant to the collective management of the property. It is a separate product from the contents insurance held by individual lot owners to cover their own belongings inside their lots.

Yes. Residential strata insurance is required under strata legislation in all Australian states and territories. The owners corporation or body corporate is generally required by law to arrange and maintain building insurance for the scheme. The specific requirements, minimum cover levels and insurable items vary by state. An owners corporation that fails to maintain adequate insurance may expose itself and lot owners to significant financial risk in the event of a major loss.

Strata insurance is arranged by the owners corporation or body corporate, typically acting through the strata committee or a strata manager on the committee's behalf. The cost of the strata insurance is generally a shared expense of the scheme, funded through the administrative or general fund levies paid by all lot owners. Individual lot owners do not arrange the strata building insurance themselves, though they may choose to hold separate contents insurance for their own lot.

A residential strata insurance policy generally covers the buildings and common property of the scheme, common area contents, public liability in common areas, office bearers' liability for committee members and voluntary workers cover. Some policies also include machinery breakdown for plant such as elevators and fire suppression systems, and government audit costs. The exact scope varies by policy and insurer.

Strata insurance does not cover the personal contents of individual lot owners. Lot owner improvements beyond the original specification of the building may or may not be covered depending on the policy and state legislation. Acts of intentional damage by committee members in their personal capacity may be excluded. Wear and tear and gradual deterioration are generally excluded. Conditions and exclusions vary by policy and state.

Strata insurance covers the shared building and common property of the strata scheme and is arranged by the owners corporation. Landlord insurance is arranged by an individual lot owner who rents out their lot and covers landlord-specific risks such as tenant damage, rent default and loss of rent within their individual unit. A lot owner who rents out their apartment in a strata scheme may hold both: strata insurance through the owners corporation and a separate landlord policy for their own lot.

Strata insurance generally does not cover the personal contents, furniture or belongings of individual lot owners inside their units. It may cover original fixtures and fittings that form part of the building structure, but the definition varies by policy and state legislation. Individual lot owners who want cover for their own contents or improvements should arrange a separate home contents or landlord contents policy for their lot.

Office bearers' liability cover is designed to protect committee members from claims arising from alleged wrongful acts committed in their capacity as committee members. This can include decisions made in good faith that are later challenged by lot owners or third parties. It does not cover committee members for intentional wrongdoing or personal activities outside their committee role. It is an important protection for volunteers who serve on strata committees in good faith.

Strata insurance premiums vary depending on the building sum insured, the number of lots, the building type and age, the location and the claims history of the scheme. Small residential schemes of a few lots can generally attract premiums from around $2,000 to $5,000 per year. Larger or more complex buildings can attract premiums from $5,000 to $10,000+ per year. These are general market ranges only. An accurate premium requires an underwriter assessment of your specific scheme.

Strata insurance claims can be very large because a single event can affect the entire shared building. A major fire, cyclone or flood event resulting in significant structural damage and requiring building-wide repairs can produce claims of millions of dollars for larger schemes. Without adequate insurance and an appropriate building sum insured, a major loss could leave the owners corporation and individual lot owners facing a significant uninsured shortfall.

Underinsurance occurs when the building sum insured is lower than the actual cost of rebuilding the structure from the ground up. In a strata scheme, underinsurance is a collective risk shared by all lot owners: if the sum insured is insufficient to fund a full rebuild after a total loss, all lot owners face a shortfall. Building costs have increased significantly in Australia in recent years, making it important for owners corporations to review and update the building sum insured regularly. A current valuation or quantity surveyor assessment can help establish an appropriate rebuild cost.

Insurers typically ask for the scheme address, number of lots, building type and year of construction, the total floor area, the current building sum insured, details of any common facilities such as pools, gyms or elevators, the claims history of the scheme for the past three to five years and the current policy expiry date. When you get in touch, we will guide you through what we need and can review your current policy against the market.

Notify us as soon as possible after an event. For major structural damage, the insurer may appoint a loss adjuster to assess the damage before authorising repairs. Do not authorise significant repair works or remove damaged materials without first consulting us. We will be actively involved throughout the claims process to ensure the owners corporation's interests are properly represented.

A prior claims history does not necessarily prevent a strata scheme from obtaining insurance. We have access to specialist strata underwriters who assess schemes individually and may still offer terms where standard insurers are reluctant. Get in touch and we can identify underwriters with genuine appetite for schemes with a claims history and present the steps taken to manage risk since prior claims.