You’ve heard about Car Insurance and Home & Contents Insurance. But do you know what Residential Strata Insurance is?
If you own a residential apartment or flat, it’s likely that you’re paying for Strata Insurance already as part of a Body Corporate fee. Here are some quick facts you may not know about this type of insurance.
1. What is Strata Insurance?
If an apartment, townhouse or flat has shared access or common areas then it’s quite likely a Body Corporate manages the maintenance of these areas. In order to protect common areas if they get damaged, Body Corporates will pay an annual premium for Residential Strata Insurance. The cost of this is divvied up between unit owners and is part of the Body Corporate fee that owners pay each year.
2. What does Strata Insurance cover?
Strata Insurance provides cover for the common or shared property for apartment buildings or flat complexes. As well as insuring the building itself, Residential Strata insurance also extends to cover the common areas such as gardens, lifts, car parks, balconies, pools, spas and even tennis courts. Such policies will tend to insure against standard perils such as fire, earthquakes, storm and water damage, accidental damage by tenants, injury to tenants, theft, floods and more. Furthermore, these policies can be extended to cover:
- Body Corporate Legal Liability
- Theft by members of the committee (Fidelity Guarantee)
- Legal Liability incurred by Office Bearers
- Personal Injury cover for Voluntary Workers
- Machinery Breakdown or Fusion
- Government Audit Costs and even Legal Defence Costs
3. What does Strata Insurance typically NOT cover?
Each Body Corporate and insurance company is different. Many owners assume that they are covered for damages to the windows, ceilings, floors and floor coverings in their apartments as they are considered to be part of the building as a whole. However, this is not always the case. The Strata Insurance policy may exclude certain property features, and doesn’t cover contents or personal items. It pays to think about this type of insurance stopping at the entry door to each individual unit and this is certainly the case when it comes to Public Liability and lot owners Fixtures, Fittings and General Contents (furniture, appliances etc.) This is even more relevant if the owner has a tenant occupying the unit or flat as they may also have a need for additional Landlords Insurance cover for loss of rent, rent default and malicious damage by tenants. Owners will need to consider their own individual circumstances to work out which insurance(s) they may need to protect themselves in addition to the Residential Strata insurance.
4. How is the correct amount of cover determined?
The Body Corporate Committee should apply to get the complex or apartment building valued at least once every five years, and the Strata Insurance policy should be reviewed each year. Older buildings require more maintenance and repairs, so the cost of inflation needs to be taken into account.
5. Which Strata Insurance policy is best?
Body Corporate Committees need to ensure that the insurance policy covers the needs of the property adequately and that it is insured for the correct sum. In the event of a fire or flood, you don’t want to be caught out by underinsuring or not having reviewed your policy. One policy will cover multiple properties or units within the building so you don’t have to purchase more than one.
6. Where can Strata Insurance be purchased?
Residential Strata Insurance cover is a common form of insurance and many firms offer this kind of cover for Body Corporates. Using an insurance broker is often a good idea as they can offer a tailored programme for the building’s needs or negotiate and have more competitive premiums.
Need Strata Insurance cover? Call Allsafe Insurance Brokers for advice or get a quote today!