Owners of strata titles typically share the premium costs of strata insurance as part of their strata fees and liabilities. Holding strata insurance is mandatory under each state’s relevant strata legislation.
Strata insurance generally covers the building and common property and contents as defined on the title for the property. This might include common areas, garden equipment, wiring, lifts, swimming pools, car parks, walls, windows, gardens, ceilings and floors. These policies often have to cover common property that the average home policy does not.
Other common property that you might find is covered under strata insurance may include some of the fixed parts of your unit, such as ducted air conditioning, but it will not cover everything. If you own or lease a strata property you should read the policy carefully so that you understand what is not covered in your unit/apartment.
Strata insurance covers only (property) common or shared property and may list certain exclusions, such as coverage against landslip or flood damage, or for the property’s fencing. It is important to remember this type of insurance doesn’t cover the contents and personal items of unitholders or residents.
Make sure you have appropriate contents cover for your belongings, and for those other things strata insurance does not protect.
Ask your broker or body corporate about the level of excess that has been negotiated with the insurer. It may help to work out how much it would cost to repair and rebuild the property in the event of a natural disaster, look at the limits in the policy, and work out from that how much excess the owners are prepared to pay.
In general, strata insurance costs the same or less for each unit owner as the premium paid by the owner of a stand-alone residence in the same area.
Each strata insurer develops and offers a unique commercial product in accordance with its underwriting appetite. Some common factors contributing to the premium include:
Ken owned a studio apartment on the fifth floor of an inner-city apartment block. One day the lift broke down because a fire occurred in the fuse box.
Fortunately, Ken and the other members of the strata committee had taken out strata insurance, which was managed by an insurance broker. A qualified team of lift mechanics determined that the controller equipment and lift motor were worn out and needed to be modernised to stop the lift from continually breaking down.
The repairs were carried out and the cost was completely covered by their policy, which meant that none of the strata members were out of pocket as a result.