What does strata insurance cover in Australia?
What strata insurance covers: the quick version
Here are the main things to know about what a strata policy covers.
It covers the shared building risk
The policy is arranged for the owners corporation, body corporate or similar scheme entity. It usually covers insured damage to the building, common property and shared assets.
It does not replace personal insurance
Personal belongings and some items inside a lot may need separate contents or landlord insurance. The boundary depends on the law, survey plan and policy wording.
Damage and maintenance are different
A policy may cover sudden damage from an insured event. It will not usually pay to correct wear, poor maintenance, faulty work or a building defect itself.
Cover varies between policies
Liability, temporary accommodation, voluntary workers, office bearers and machinery are common sections. Limits, excesses and exclusions can differ.
Strata insurance covers risks shared by the owners in a strata or community scheme. The policy belongs to the scheme entity, not to one lot owner.
It normally covers insured damage to the building and common property. It can also include liability and other covers needed by the owners corporation or body corporate.
The difficult part is the boundary. A wall, floor covering, appliance or improvement can be treated differently depending on the state, the registered plan and the policy.
What is insured as the building?
The policy definition of building is the starting point. It can include the main structure and items owned collectively by the scheme.
Examples may include:
- roofs, external walls and structural floors;
- foyers, stairwells, lifts and common hallways;
- driveways, fences and fixed common facilities;
- pipes, cables and other shared services;
- common-area contents owned by the scheme; and
- some fixtures or improvements inside lots, where the law and policy treat them as part of the building.
This list is not universal. A registered plan can place a boundary in a different position. State rules also use different terms and definitions.
Queensland is a clear example. The body's insurance responsibility can change depending on whether the scheme uses a building-format or standard-format plan. A free-standing building on a standard-format lot may be the lot owner's responsibility, while a building sharing a common wall may need to be insured by the body corporate.
Scheme policy or personal policy?
The table below is a practical starting point. It is not a substitute for the plan or policy.
| Item or risk | Scheme's strata policy may cover | Owner, landlord or occupier may need separate cover |
|---|---|---|
| Main structure and common property | Usually, subject to the building definition | Only where the scheme is not responsible under the law or plan |
| Shared contents in a foyer, gym or laundry | Often included or available | Not normally an individual's contents risk |
| Furniture, clothing, computers and personal belongings | Usually no | Contents insurance |
| Carpet, floating floors, curtains and blinds inside a lot | Varies by jurisdiction and policy | Often contents or landlord cover |
| Rental default or tenant damage | Not a standard strata-building risk | Landlord insurance may be needed |
| Injury in a common area | Legal liability section may respond | Separate personal or business liability may still be needed for other activities |
| Committee decisions and alleged wrongful acts | Office bearers' section may respond | Limits and exclusions need checking |
Ask the strata manager or committee for the current policy schedule and wording. An owner can then compare that boundary with their own contents or landlord policy.
Common sections in a strata policy
Insured property
This section covers loss or damage to the insured building and common contents from events allowed by the policy.
Do not assume that every cause of damage is covered. The event, exclusions, excess and any endorsements all matter.
Legal liability
This section can cover compensation and legal costs where the scheme is legally liable for injury or property damage.
State laws can set minimum liability requirements. The policy limit still needs to suit the scheme's circumstances.
Temporary accommodation and loss of rent
If insured damage makes a lot unfit to occupy, the policy may pay specified temporary-accommodation costs for an owner-occupier or loss of rent for an owner who leases the lot.
Time limits and dollar limits differ. Some policies calculate the benefit as a percentage of the building sum insured.
Voluntary workers
Committee members and owners sometimes do unpaid work for the scheme. A voluntary-workers section can pay set benefits after an accidental injury while the person is doing authorised work.
This is different from workers compensation.
Office bearers' liability
Committee members make decisions about repairs, contracts, levies and scheme records. Office bearers' cover can respond to certain claims arising from an alleged wrongful act in that role.
The definition of an office bearer, the conduct covered and the limit need to be checked.
Fidelity and cyber
Fidelity cover can protect scheme funds against specified dishonest acts. Some current products also include limited cyber or social-engineering cover.
CHU, for example, combines fidelity and cyber protection in its current residential product. Hutch lists cyber within its residential strata cover. Those are provider examples, not a rule for every policy.
Machinery breakdown
Lifts, pumps, air-conditioning plant and other shared machinery can create a separate risk. Machinery breakdown may be included, optional or unavailable.
Check the machinery definition and age or maintenance conditions. Ordinary wear is not a breakdown claim.
Catastrophe cover
Rebuilding costs can rise after a major regional event. Some policies include or offer extra catastrophe cover above the main building sum insured.
The trigger and extra limit differ. A declared catastrophe extension is not the same thing as automatic cover for every cyclone, flood or bushfire loss.
Does strata insurance cover water damage?
It can, but the cause matters.
A policy may cover sudden damage caused by an insured escape of liquid. It may also cover resulting damage to insured property after an unexpected event.
The policy may not cover:
- gradual leaks that were not repaired;
- corrosion, wear or deterioration;
- the defective pipe, seal or waterproofing itself;
- faulty design or workmanship;
- mould or rot outside a specific covered event; or
- damage below the applicable excess.
Water can also cross the boundary between common property and a lot. Before arranging repairs, identify the source, check the registered plan and notify the strata manager or insurer.
Are building defects covered?
The cost of correcting a defect is commonly excluded. The same applies to poor workmanship, wear and maintenance.
That does not answer every claim. A policy may treat separate damage caused by a defect differently from the defect itself. The wording, timing and facts decide the outcome.
There is also a difference between insuring a building that has a defect and insuring the defect.
Rubix says it considers some strata buildings with known defects or ACP cladding. Vero says it reviews defects and remediation case by case. This means the provider may assess the building. It does not promise to pay for the defect or remediation.
Read the exclusions and any endorsement added to the policy schedule. If the building has a current remediation plan, provide the reports and completed-work evidence during quotation.
Do lot owners still need contents or landlord insurance?
Usually, yes.
An owner-occupier may need contents insurance for belongings and items not included in the strata building definition.
A landlord may need cover for their contents, tenant damage, loss of rent outside the strata policy and other landlord risks.
A tenant may need contents insurance for their own property and personal liability.
Start with the scheme's policy. Check what it says about paint, floor coverings, appliances, air conditioning, cabinetry and lot-owner improvements. Then compare the remaining risk with the personal policy.
For more detail about setting the building amount, read Strata insurance valuations and underinsurance.
A practical cover checklist
Before renewal or a committee vote, check:
- the exact legal name of the insured scheme;
- the building and common-contents definitions;
- the building sum insured and valuation date;
- legal-liability limit;
- temporary-accommodation and loss-of-rent limits;
- voluntary-workers, fidelity and office-bearers sections;
- machinery, flood and catastrophe treatment;
- standard excesses and any special water, cyclone or defect excess;
- exclusions and endorsements; and
- what owners must insure separately.
Frequently asked questions
Does strata insurance cover the inside of an apartment?
Sometimes. Structural parts and certain fixed items may fall within the strata building definition. Personal belongings and some floor or wall coverings may not. Check the law, survey plan and policy.
Does strata insurance cover carpet?
Not always. Carpet inside a lot is often treated as the owner's contents, but the answer can vary. Check both the strata policy and the owner's contents or landlord policy.
Does strata insurance cover a kitchen or bathroom renovation?
Fixed improvements may be part of the building or covered under a lot-owner-improvements extension. The scheme must still declare material changes and maintain an adequate building sum insured. Poor workmanship or the cost of correcting a defect is commonly excluded.
Who pays the insurance excess?
The policyholder pays the insurer's excess, but the scheme may be able to allocate that cost to a lot owner in some circumstances. The law and the facts behind the claim matter. Check the rules for the state or territory.
Does strata insurance cover tenants' belongings?
No. A tenant normally needs their own contents insurance.
Does strata insurance cover flood?
It depends on the product, postcode and policy. Sure states that flood is included in its current regional Queensland product. Chubb describes flood as optional and otherwise excluded. QUS's cited wording excludes flood. These examples show why the current PDS and schedule must be checked.
Does strata insurance cover a burst pipe?
It may cover resulting insured damage from a sudden escape of liquid. It may not cover the worn or defective pipe itself, gradual leakage or maintenance. The excess can also affect whether a claim is practical.
Is public liability part of strata insurance?
Strata policies commonly include legal-liability cover, and state laws can require a minimum level. Confirm the limit and the people or entities covered under the current policy.