You’ve heard about Car Insurance and Home & Contents Insurance. But do you know what Residential Strata Insurance is?
If you own a residential apartment or unit, it’s likely that you’re paying for Strata Insurance already as part of a Body Corporate fee. Here are some quick facts you may not know about this type of insurance.
What is Strata Insurance?
If an apartment, townhouse or unit has shared access or common areas then it’s quite likely a Body Corporate manages the maintenance of these areas. In order to protect common areas if they incur damage, Body Corporates will pay an annual premium for Residential Strata Insurance. The cost of this is generally divided between unit owners and is part of the Body Corporate fee that owners pay each year.
What does Strata Insurance cover?
Strata Insurance provides cover for the common, or shared areas of apartment buildings or townhouse complexes. As well as insuring the building itself, Residential Strata insurance also extends to cover the common areas such as gardens, lifts, car parks, balconies, pools, spas and even tennis courts. These policies will generally tend to provide coverage against events such as fire, earthquakes, storm and water damage, accidental damage by tenants, injury to tenants, theft, floods and more.
In addition, these policies can be extended to cover:
- Body Corporate Legal Liability
- Theft by members of the committee (Fidelity Guarantee)
- Legal Liability incurred by Office Bearers
- Personal Injury cover for Voluntary Workers
- Machinery Breakdown or Fusion
- Government Audit Costs and even Legal Defence CostsWhat does Strata Insurance typically NOT cover?
It can be common for owners assume that they are covered for damages to windows, ceilings, floors and floor coverings in their apartments as they are considered to be part of the building as a whole. However, this is not always the case. The Strata Insurance policy may exclude certain property features, and won’t cover contents or personal items.
It can be beneficial to think about this type of insurance as stopping at the entry door to each individual unit. This is even more relevant if the owner has a tenant occupying the unit or flat as they may also have a need for additional Landlords Insurance cover for loss of rent, rent default and malicious damage by tenants. Owners will need to consider their own individual circumstances to work out which insurance(s) they may need to protect themselves in addition to the Residential Strata insurance.
It’s also important to remember that each Body Corporate and insurance company is different.
How do you determine the amount of Strata Insurance you need?
The Body Corporate Committee should apply to get the complex or apartment building valued at least once every five years, with the Strata Insurance policy being reviewed each year. Older buildings tend to require more maintenance and repairs, so factoring this in has the potential to save you money in the long run.
Which Strata Insurance policy is best?
Body Corporate Committees need to ensure that the insurance policy covers the needs of the property adequately and that it is insured for the correct sum. In the event of a fire or flood, you don’t want to be caught out by underinsuring or not having reviewed your policy. One policy will cover multiple properties or units within the building so you don’t have to purchase more than one.
Where can Strata Insurance be purchased?
Residential Strata Insurance cover is a common form of insurance and many firms offer this kind of cover for Body Corporates. Using an insurance broker can be a good idea as they can provide insights that may not be available otherwise.
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Disclaimer:
This general information does not take into account your specific objectives, financial situation, or needs. It is also not financial advice, nor complete, so please contact us to discuss whether these types of insurance are appropriate for you. These types of insurance are issued by various insurers and can differ. Coverage is always subject to the policy terms and conditions. Deductibles, exclusions, and limits apply Copies of Product Disclosure Statements/Policy Wordings can be provided upon request and should be considered before deciding if this insurance is right for your business.
