A Body Corporate must take out insurance for its Title Scheme with each owner paying a portion of the cost through their levies. This is called Body Corporate Insurance also known as Strata Title Insurance.
Business Insurance Specialists has substantial experience in managing the insurance requirements of owners and body corporates.
The cost of insurance depends upon several factors including situational address of building, building sum insured, construction, protection against fire, type of occupancy and overall prior claims experiences. In recent times, additional issues have been damage arising from defects, external wall cladding, and if you are in Northern Australia. These issues have had bearing on obtaining cost effective insurance or even obtaining insurance.
Under government legislation, which changes from state to state, the normal legislated insurance that is required as a minimum is Building and Public Liability insurance.
In most policies, Strata Title insurers will provide coverage for Common Contents, Temporary Accommodation, Office Bearers Liabilities, Volunteer Personal Accident and Unit Owner Improvements.
Due to the nature of individuals owning units within the one community, there is often misunderstandings on who is responsible – the Body Corporate or the individual Lot Owner – for damage. In all cases, it is advisable for an owner occupier, or a Landlords, to take out separate contents insurance that will automatically include Liability insurance for their individual lot.
Examples of incidents not insured under your Body Corporate policy include:
Once a body corporate is registered and the building is completed and certified by council, the insurance should be taken immediately.
As a developer you are responsible for taking out the first year of insurance. You can recover these costs by an adjustment in your sales contracts with the buyers. You need to have both an EGM and your insurance in place prior to settling your contracts so Insurance is time critical.
Business Insurance Specialists can assist in obtaining competitive terms quickly on your behalf through our relationships with all the Australian strata title insurers in the market.
Who actually pays the excess is of importance with any insurance claim, however, especially so with body corporates. In brief, the payment of an excess depends upon, where and how the damage occurred.
A summary for guidance is provided below based on the lots damaged.
Only one lot - the individual lot owner should pay the excess unless the body corporate decides that it is unreasonable. Typically, it would have to be because the committee believes the damage was caused by the body corporate or from common area.
Two or more lots - the body corporate should pay the excess unless the body corporate decides it is reasonable for the excess to be paid by 1 or more of the affected lots. In this case, if an individual lot owner left the tap on, and then caused damage to other units via water damage, then the individual lot owner would need to pay the excess. Of interest, the individual lot owner may need to have their own Contents and Liability insurance, as the Strata insurer may seek recovery of their payment by claiming against the individual lot owner.
One or more lots and the common property - the body corporate would normally pay the excess unless the body corporate decided otherwise.
It is recommended to take separate Residential Landlord insurance as the Strata Title does not insure:
Q: I have a pipe in my kitchen that has leaked and caused damage to all my cabinets, and then the carpet in my unit. Strata insurance covers the damage to the cabinets. Is the leaking pipe, and the tiles that need to be broken and replace to fix the leaking pipe, covered by insurance?
A: No, insurance does not cover lack of maintenance. The actual repair of the pipe, and the cost to repair the pipe, such as removing and replacing the tiles, are not insured.
You are covered for:
Common area contents insured includes:
The following items are not covered under the strata policy and owners must take out individual cover over these items.
In some cases, a Strata Policy could be extended to provide coverage for Floating Floorboards, however, you would need to check the individual insurers coverage.
If you are in NSW, body corporate legislation for an individual lot owner’s unit does not require body corporate insurance coverage for Wallpaper, Paint, Floor and Ceiling coverings within a lot. Please ensure you are adequately protected by reviewing your relevant insurance policies.
The responsibility of taking insurance is of the Body Corporate. In practice, this is via the Committee and the designated committee members. Normally the Body Corporate manager will have a preferred supplier that they use to provide insurance, however, the insurance can be provided via this supplier or totally independently by the committee direct.
To assist in the process of obtaining quotes, Business Insurance Specialists Pty Ltd as a specialist strata insurance broker has designed a simple questionnaire for a Body Corporate committee's use. This allows us to obtain in most cases all the relevant information we need for your strata insurance.
For a full review of your Body Corporate insurance, please contact Business Insurance Specialists Pty Ltd on (07) 3139 3900 or complete the form below and we will discuss coverage with you.