Strata insurance, also known by several names, including owners corporation insurance and body corporate insurance, is a type of special insurance intended to protect common or shared property as specified under a property’s strata title or scheme. This covers more than just the actual building’s walls and roof; it frequently includes common areas and even specific liabilities. Strata insurance is mandatory for properties that are separated into separate “lots,” each owned by a distinct person but under the collective authority of a committee or strata council.
Strata insurance Adelaide is crucial for sheltering owners from unanticipated financial risks, maintaining legal compliance, and protecting common assets. Before purchasing strata insurance, it’s important to comprehend a few factors to ensure the policy covers all relevant areas and offers sufficient protection.
Here is what you should know about strata insurance before obtaining it:
Legal requirements
Strata insurance is a legal requirement in Australia, the UK, and parts of the US, with coverage and minimum levels varying depending on the jurisdiction. In Australia, for instance, strata insurance is mandatory for owners and corporations, requiring an understanding of local laws to avoid fines, penalties, or financial hardship in case of uninsured disasters.
What strata insurance cover
Property coverage: The policy covers damage to buildings and common property areas, including rent loss due to fires, ensuring the property is safe to occupy.
Public liability: This section covers public injuries or property damage due to strata negligence, covering slip-and-fall accidents and malfunctioning equipment in communal areas.
Legal liability: This section covers the legal defense costs for matters brought against the corporate body, including regulatory audits and workplace health and safety violations.
What it does not cover
Strata insurance does not cover personal contents, internal fittings, negligence or poor maintenance, or owner’s liability. Owners are responsible for insuring against accidents or damage in their units. Understanding these exclusions helps identify the need for additional policies, such as contents or landlord insurance, to cover personal or unit-specific risks.
The cost of strata insurance
Strata insurance premiums vary based on factors like building size, age, location, shared facilities, and claims history. Larger, older buildings may require higher premiums due to structural damage risk. High-risk areas, shared facilities, and frequent insurance claims may also increase premiums.
Comparing strata insurance policies is crucial to ensure good value, as premiums are typically paid through strata fees, striking a balance between sufficient coverage and cost-effectiveness.
Property valuation
To ensure proper insurance coverage, your building should be insured for its full replacement value, not just its market value, and a qualified valuer should regularly assess the property. Periodically reviewing and updating insurance valuations ensures the building is adequately covered for current replacement costs, including materials, labor, and inflation, in case of a disaster.
The claim process
To obtain strata insurance, you must understand the claims process, including who makes claims, time limits, and required documentation. Clarify these details with the insurance provider to ensure smooth processing and avoid delays in case of an emergency.
To make a claim, you must provide evidence, such as invoices or photos, to support your claim. Some policies have stringent deadlines for reporting damage or submitting a claim. So, you want to ensure that you submit your claim on time because late submission may result in claim rejection.