Understanding Residential Strata Insurance: What You Need to Know
Residential strata insurance, often called body corporate insurance, protects shared property and common contents managed by a strata title or body corporate. Owners of units within a strata scheme usually share the cost of this insurance through their strata fees and associated liabilities. Importantly, strata insurance is compulsory and must include public liability coverage to protect against injuries that occur on common property.
Since each Australian state and territory has its own laws regarding strata property insurance, it’s essential to ensure your coverage complies with local legislative requirements. The body corporate is responsible for arranging insurance and ensuring the policy meets these minimum legal standards.
What Does Strata Insurance Cover?
Typically, strata insurance covers the building structure and common property as outlined in the property title. This can include shared spaces and items like gardens, wiring, lifts, swimming pools, car parks, walls, windows, ceilings, and floors—areas usually not covered by a standard home insurance policy.
Some fixed elements within your unit, such as ducted air conditioning, may also be covered, but coverage varies. If you own or rent a strata property, it’s crucial to read the policy thoroughly to understand what parts of your unit are excluded.
What’s Usually Excluded from Strata Insurance?
Strata insurance primarily covers shared or common property and often excludes certain risks, like landslip or flood damage, as well as fencing. It’s important to note that personal belongings and unit owners’ contents are not covered under strata insurance.
Therefore, you should have separate contents insurance for your personal items and any property not included under the strata policy.
Deciding on the Excess
Discuss with your strata manager or body corporate the excess amount agreed upon with the insurer. To determine a suitable excess, consider the potential cost of repairs or rebuilding after a natural disaster, review the policy limits, and evaluate what the owners are willing to contribute in the event of a claim.
What Influences the Premium?
Generally, strata insurance premiums per unit owner are comparable to or lower than those for standalone homes in the same area. However, each insurer creates tailored commercial policies based on their own risk appetite.
Common factors affecting strata insurance premiums include:
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State legal insurance requirements
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Government taxes like stamp duty and GST
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Building age and condition
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Replacement cost of the property
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Location risk profile
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Claims history of the strata complex
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Property vulnerability due to design, materials, or building codes
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Commercial use of the property (e.g., holiday rentals)
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Agent fees and commissions
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The level of excess selected by the body corporate
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Costs related to maintaining common areas like car parks, stairwells, fire systems, lifts, and pools
If you live in or manage a strata property, understanding these details helps ensure you have the right coverage in place and avoid costly surprises. Always review your body corporate’s insurance policy carefully and confirm it meets your state’s requirements.
