How to compare strata insurance quotes

To compare strata insurance quotes properly, start with the same risk information and requested cover. Then compare the total cost, policy sections, limits, excesses, exclusions and insurer behind each option.

Price alone does not show whether two quotes do the same job.

A committee also needs a clear record of why it selected a policy. A short comparison table can make that decision easier to explain at a meeting.

Start with one accurate set of facts

Prepare a common quote pack before approaching providers.

Include:

• legal scheme name and property address;
• registered plan and number of lots;
• residential, commercial and short-stay use;
• commercial tenant schedule, where relevant;
• building sum insured and latest valuation;
• current policy schedule and endorsements;
• claims history for the period requested;
• building age, construction and occupancy;
• defect, cladding, fire-safety and remediation reports; and
• required policy sections and liability limits.

Record the date and version of the information. If one quote uses a different building value or omits a known issue, correct it before comparing price.

Insurer, underwriting agency and broker

The organisations named on a quote can have different roles.

For example, CHU is an underwriting agency acting for QBE on its current residential strata product. Strata Community Insurance acts for Allianz. Sure's current material names XL Insurance Company SE, Australia branch. The brand and legal insurer should both appear in the comparison record.

Several brands can share one insurer

A list of logos can overstate market diversity.

• Flex is owned by CHU. Its current capacity can be Lloyd's or QBE depending on building value.
• Suncorp, GIO, AAMI and Vero strata products use AAI Limited, although the products and direct or broker routes can differ.
• Chubb provides its own strata product and is also the capacity named for the Longitude facility in the approved research.
• Sure and AXIS Underwriting products use AXA XL capacity in the cited documents.

Shared capacity does not make the policies identical. The appetite, wording and service route can still differ. It does mean the committee should not assume each related brand is a separate insurer willing to take the same risk independently.

Break down the total cost

A quote can contain:

• base premium charged for the insurance risk;
• government taxes, duties and levies;
• broker fee;
• insurer commission paid to a broker or intermediary;
• strata-manager commission or service fee; and
• other disclosed charges.

Ask for the total payable and each component.

In New South Wales, current government guidance says a strata managing agent sourcing quotes must clearly set out the base premium, commission amounts, broker fees, who receives those amounts and government levies. A commission ban applies where the owners corporation obtains the quotes and arranges payment without the manager's help.

These are NSW requirements. Do not assume the same wording applies in another jurisdiction.

Consumer Affairs Victoria recommends that owners corporations seek at least three quotes and says managers should disclose insurance agency roles and commissions.

Compare the building sum insured

Two prices based on different building values are not a fair comparison.

Check:

• the main building sum insured;
• common-contents amount;
• escalation or safety-net amount;
• catastrophe extension;
• demolition and debris allowance;
• professional fees; and
• any sublimit for lot-owner fixtures or improvements.

If the valuation is old, resolve that question before selecting the cheaper quote. See Strata insurance valuations and underinsurance.

Compare insured events and policy sections

Use a consistent checklist.

Property damage

• Accidental damage or listed-event basis.
• Fire, storm, cyclone and escape of liquid.
• Flood and storm surge treatment.
• Glass, impact, theft and malicious damage.
• Catastrophe or escalation allowance.

Scheme liabilities and people

• General or public liability limit.
• Office bearers' liability.
• Voluntary workers.
• Workers compensation where legally required and applicable.

Money, records and machinery

• Fidelity or crime cover.
• Cyber or social-engineering cover.
• Machinery breakdown.
• Government audit, appeal or legal expenses.

Owners and occupiers

• Temporary accommodation.
• Loss of rent.
• Lot-owner fixtures and improvements.
• Common contents.

A tick in a comparison table is not enough. Check the definition, limit, excess and exclusions behind it.

Compare excesses

The standard property excess is only one part of the schedule.

Look for separate excesses applying to:

• water damage or escape of liquid;
• cyclone, storm or flood;
• earthquake;
• glass;
• machinery;
• liability;
• defects or known conditions; and
• individual lots or repeated claims.

A high special excess can change the practical value of a policy. Record both the amount and the event that triggers it.

Also check who may have to fund the excess under the scheme's state law and internal decisions. That question is separate from the amount charged by the insurer.

Read exclusions and endorsements

The PDS gives the standard wording. The quote and schedule can add endorsements for the particular building.

Check for:

• defects, faulty workmanship and maintenance;
• combustible cladding;
• water ingress or waterproofing;
• vacancy and unoccupancy;
• construction or major works;
• commercial tenant restrictions;
• flood or action by the sea;
• asbestos;
• cyber and data loss; and
• a requirement to complete risk improvements.

An endorsement can matter more than a small difference in premium.

If one quote excludes a known condition and another refers it for review, make sure the second provider's final terms are available before the committee votes.

Check the provider's appetite and route

A quote may be direct, broker-arranged or part of a specialist facility.

Direct can suit a simple scheme that fits the provider's stated limits. A broker can be useful where the building is large, commercial, catastrophe-exposed or difficult to place.

The route does not decide policy quality by itself. Compare what work is being done, what advice is provided and how the intermediary is paid.

Ask a broker:

• which insurers or agencies were approached;
• which declined, quoted or requested more information;
• whether the broker is agent of the client or insurer for each part of the transaction;
• what fee and commission apply;
• whether the quote includes all current disclosures; and
• what help is provided during a claim.

Consider claims and service information carefully

Claims service matters, but public comparisons are often incomplete.

Useful questions include:

• Who receives the first notice of loss?
• Is emergency help available outside business hours?
• Who appoints assessors and repairers?
• Can the scheme use its own repairer?
• Who keeps owners informed during a large claim?
• What is the complaints process?

Do not turn an isolated review or award into a guarantee about the scheme's future claim. Use comparable evidence where it exists and treat marketing claims as marketing claims.

A like-for-like comparison table

Leave a cell blank until the answer is confirmed. Do not treat blank as “not covered”.

Record the committee's decision

Keep:

• the common information pack;
• every final quote and schedule;
• PDSs and other policy documents;
• remuneration disclosures;
• the comparison table;
• questions asked and written answers;
• meeting papers and minutes; and
• the reason for the decision.

The lowest price may still be selected. The record should show that the committee understood the material differences before doing so.