16 Apr Insurance
Owners corporation insurance in Victoria – also known as body corporate insurance, strata title insurance, or OC insurance – is a mandatory form of protection for buildings governed by an owners corporation. Understanding how strata insurance works is essential for protecting property and avoiding costly gaps in cover.
This guide explains what body corporate insurance covers, what it doesn’t, how it differs from personal home insurance.
What Is Owners Corporation Insurance?
In Victoria all owners corporations are required to insure the common property. Most owners corporation must also take out insurance for the building within owners lots. This is insurance is known by a variety of names which include:
- Strata title building insurance
- Residential strata insurance Victoria
- Strata property insurance
- Strata residential insurance
- Strata house insurance
Regardless of the name, the purpose is the same, to insure the buildings and common property against damage, liability, and major risks.
Owners corporations typically obtain cover through a strata insurance company or a specialist strata insurance broker who can source competitive strata insurance quotes and provide tailored strata insurance solutions.
What Does Body Corporate Insurance Cover?
A typical strata insurance policy in Victoria includes the following.
Building and common property such as walls, floors, ceilings, roofs, common property fixtures and shared facilities such as lifts, foyers, and stairwells.
The buildings comprising an owners lot are included in the insurance for almost all owners corporation in Victoria. There are limited exceptions to the obligation of the owners corporation to insure the buildings within members lots and these are typically townhouse style development. All multi-story buildings, including apartments, are required to be insured by the owners corporation.
Common property contents covers items which do not form part of buildings but are owned by the owners corporation such as hallway carpets, furniture in the lobby, gym and pool equipment.
Public Liability covers injury and loss occurring on the common property, most commonly personal injury. If a person is injured on common property, the owners corporation insurance responds.
Legal defence and liability cover may arise if the scheme is subject to claim arising from its activities.
Voluntary workers cover provides for compensation for a member who is injured whilst undertaking voluntary work on common property. Voluntary work is unpaid work.
Loss of rent cover is where a lot or lots, are deemed uninhabitable due to an insurance event and provides for alternative accommodation, comparable to the members lot, for the duration of the premises being uninhabitable. If a lot is subject to a tenancy agreement, the compensation is the rent lost. For an owner occupied a lot, the cover is the rent for comparable accommodation, such as serviced apartment, whilst the apartment cannot be occupied. The insurer will determine if loss of enterprise and it is not a matter for an owner to unilaterally decide this.
The policy may cover other matters depending on particular circumstance. In commercial premises there may be plate glass or cover for process air-conditioning. This will depend upon the policy wording.
For the strata insurance to respond requires an event such as fire, storm, wind, flood, burst pipes, impact damage or vandalism and. The extent of cover will depend upon the particular policy and not all causes may be covered, for example flood damage may be excluded or if offered by the insurer may attract additional premium.
What is not covered by the strata insurance?
Whilst the strata policy will usually cover the buildings, including floors walls and ceilings within the lot and fixtures such as a stove or permanent Peter, it does not include carpets, curtains, blinds, appliances and personal belongings within an owner’s lot or any personal possessions left on common property which includes motor vehicles.
Also excluded is personal liability within the lot and if a person is injured inside the lot, this is not covered by the strata insurance.
Do I need home insurance I have body corporate insurance?
As the strata insurance covers only the building within lots an owner should have contents insurance for personal possessions including carpet, curtains, blinds and possessions within a lot. A contents policy should include personal liability cover.
If a lot is leased the owner should have landlord’s contents insurance to cover the owner’s contents within the lot and it should include liability cover. Landlords should advise tenants to have contents cover for their own goods and chattels within the lot.
What Repairs Are Body Corporate Responsible For?
Insurance and maintenance obligations often overlap. Generally, the owners corporation is responsible for maintaining common property which may, depending on the plan of subdivision may oblige it to maintain roofs, external walls, shared services such as plumbing, footings and foundations as well as stairways, lifts, foyers, entry doors and fences. The extent of these will depend upon the design and building as constructed.
Insurance is not a savings scheme but responds to damage, while maintenance relates to upkeep. The insurer does not meet the cost of maintenance and a claim only arises where there is an event within the policy wording which has given rise to damage.
The Manager’s Role in Insurance
The Victorian market includes a range of strata insurers, strata insurance companies, and specialist strata insurance brokers who have the necessary Australian Financial Services Licence.
Managers generally deal with brokers in order to obtain competitive quotations, manage claims and provide policy interpretation where required. The manager is able to instruct the broker seek quotations for approval by the committee or owners corporation at the annual general meeting.
The complexities of strata insurance, introduced by the mix of common property and owners lots coming under the one policy requires particular knowledge and experience ensure any policy is appropriate for the needs of the owners corporation. A general broker may not be aware of the intricacies of the strata legislation and for this reason the manager is best placed to deal with specialist brokers who have an understanding of this complex area. This reduces the possibility of policies which may not comply with the legislation and may leave the owners corporation exposed to unnecessary risk.