If you own or live in a townhouse, apartment block, or unit that’s part of a strata title, strata insurance is one of the most important protections you can have. But many owners aren’t quite sure what it covers or why it’s legally required. Let’s break it down.
What Is Strata Insurance?
Strata insurance (also known as body corporate insurance) covers shared property and common areas in a strata-titled complex. This includes buildings, shared driveways, stairwells, roofs, lifts, car parks, and gardens. It’s designed to protect all owners collectively against unexpected events like fire, storm, flood, or vandalism.
In simple terms, while your personal contents insurance covers what’s inside your apartment or unit, strata insurance covers the building structure and all common property owned jointly by the lot owners.
Why Is It Compulsory?
Across Australia, strata insurance is mandatory under state and territory legislation. For example, in Tasmania, the Strata Titles Act requires body corporates to insure all buildings and common property for their full replacement value. This ensures that if a fire or natural disaster strikes, all owners can collectively rebuild without facing devastating personal costs.
Without adequate strata insurance, owners could be left footing massive repair bills sometimes running into millions of dollars.
What Does Strata Insurance Cover?
While each policy differs slightly between insurers, strata insurance generally includes:
- Building and common property: Walls, roofs, lifts, foyers, fences, and shared utilities.
- Public liability: Cover for injuries or property damage occurring in common areas, such as a visitor slipping on a wet floor.
- Catastrophe cover: Optional protection for large-scale disasters like bushfires or floods where rebuilding costs spike.
- Office bearer’s liability: Protection for committee members (body corporate members) against legal claims arising from decisions made in good faith.
- Shared assets: Common area contents like gym equipment, garden furniture, or shared tools.
It’s important to note that strata insurance typically does not cover individual lot owners’ personal belongings, floor coverings, or internal fixtures added after construction, these are covered under a contents or landlord insurance policy.
Who Arranges and Pays for It?
The body corporate (or owners’ corporation) is responsible for arranging strata insurance. Premiums are usually paid collectively through strata levies, meaning each owner contributes based on their unit entitlement.
Premiums depend on factors like building age, construction materials, claims history, location risk (such as flood or bushfire zones), and the level of excess chosen.
Why Expert Advice Matters
Strata insurance can be complex. With multiple owners, varying unit values, and evolving legal requirements, it’s easy for policies to be underinsured or misunderstood. You should speak with your insurance broker to help ensure your strata policy meets all legal obligations, accurately reflects rebuilding costs, and provides the right level of protection for every owner.
Final Word
Strata insurance isn’t just a box to tick, it’s a safety net that protects everyone involved in a shared property. By ensuring the building and common areas are properly insured, you’re not only meeting your legal responsibilities but also safeguarding the long-term value of your investment.
