Insurance FAQ

In a building format plan, the body corporate must take out the following insurances:

• Public liability – minimum $10 million cover (for common property and body corporate assets).
• Full replacement value insurance for each building which contains one or more lots.
• Full replacement value for common property and body corporate assets (e.g. pool and pool equipment)

In a building format plan, the premium for the insurance policy must be collected from owners in accordance with the interest schedule lot entitlements (shown in the community management statement).

The body corporate may adjust fairly the contribution amount payable by a lot owner in response to an improvement or behaviour that increases the cost of insurance (e.g. a lot owner may be lawfully operating a welding business that causes the insurance premium to inflate).

In a standard format plan, the body corporate must take out the following insurances:

• Public liability – minimum $10 million cover (for common property and body corporate assets).
• Full replacement value for common property and body corporate assets (e.g. pool and pool equipment)
• Full replacement value insurance for only those buildings within each lot that share a common wall with a building in another lot (e.g. terrace style townhouses).

The body corporate may also establish a voluntary insurance scheme for insurance of those lots in the scheme that the body corporate would not ordinarily be required to insure (e.g. a standard format plan townhouse with no common walls).

In a standard format plan, the premium for the insurance policy must be collected from owners in an amount proportional to the replacement value of each lot that is either required to be insured, or insured as part of a voluntary insurance scheme. This proportion should be determined by a valuer.

The body corporate may adjust fairly the contribution amount payable by a lot owner in response to a behaviour that increases the cost of insurance (e.g. a lot owner may be lawfully operating a welding business that causes the insurance premium to inflate).

Strata Insurance is designed to cover all permanent fixtures, fittings & structures, and buildings on the property. State legislation provides guidance on what insurance policies must include and exclude.

A strata insurance policy is designed to cover:

• Fixtures and fittings and fixed furnishings (but excluding temporary fixtures and fittings);
• All services to the buildings;
• Fixed or built-in plant, equipment, and appliances;
• Floor coverings excluding carpets & temporary flooring;
• Tennis courts, in-ground pools, and spas;
• All other structural improvements at the Location including fencing, gates, paths, and roadways;
• Retaining walls, awnings, and signs;
• Marinas, wharves, jetties, docks, pontoons, swimming, platforms or similar type facilities which are used for non-commercial purposes;
• Fixed artwork or sculptures

Strata Insurance does not cover any items that are located within lots that are not permanent fixtures. The basic principle is that if you pick the unit up and shake it anything that falls out is not covered along with temporary flooring such as carpet, blinds & curtains, appliances that are not permanently attached.

• Lot owners’ contents and any other personal property of theirs;
• Vehicles, caravans, trailers;
• Temporary wall, floor and ceiling coverings within a Lot/Unit;
• Mobile or fixed air-conditioning units servicing an individual Lot/Unit.

Below is a list of general household items that Owners are unsure if the Body Corporate Building Policy covers-

• blinds;

Carpet floor coverings within individual units/lots are specifically excluded under the definition of building under most Strata Insurers PDS and Policy Wording. If the owner is wishing to claim for damage to this item, it would be recommended that a claim is lodged with their respective contents/landlord Insurer for further consideration.

• Floating floors;

It would depend what type of flooring. If the Body Corporate have selected the option on the Policy to cover for floating floors, most floating timber floors would be covered.

If the Body Corporate have not opted to include floating floor cover under the Building Policy, the flooring would not be covered. In this case, it would be recommended that a claim is lodged with their respective contents/landlord Insurer for further consideration.

• installation of new carpet;

Carpet floor coverings within individual units/lots are specifically excluded under the definition of building under most Strata Insurers PDS and Policy Wording. If the owner is wishing to claim for damage to this item, it would be recommended that a claim is lodged with their respective contents/landlord Insurer for further consideration.

• replacement of dishwasher;

Dishwashers are considered a contents item and do not fall within the definition of building under most Strata Insurers PDS and Policy Wording.  If the owner is wishing to claim for damage to this item, it would be recommended that a claim is lodged with their respective contents/landlord Insurer for further consideration.

• replacement of Reverse Cycle Split Ducted Air Conditioner;

Air conditioning units servicing individual lots/units are specifically excluded under the definition of building under most Strata Insurers PDS and Policy Wording. This is in accordance with Queensland legislation. If the owner is wishing to claim for damage to this item, it would be recommended that a claim is lodged with their respective contents/landlord Insurer for further consideration.

Owners may lodge an insurance claim by completing and submitting the insurance claim form. If you are unsure whether a claim is possible under the body corporate insurance, or if you have any other queries relating to insurance at your scheme, contact your Community Relationship Manager by visiting our people.

• Obtain quotes to fix any damage and provide these to Strata Management Group.
• Report crimes (including malicious damage) to Queensland Police Service immediately and obtain a crime number.
• Take photos of any damage, as well as the surrounding area.
• If a person is responsible for the damage, obtain their contact information and submit this with your claim form (if possible, take a photo of their licence or identification).
• If a vehicle is involved, record the registration number, make, model, year, body shape and colour.

The responsibility for the insurance excess depends on the nature of the claim and the lots that are involved.

• For claims where a person has caused damage (accidental or malicious) that person is generally responsible for the excess.
• For claims where an external event has occurred (e.g. a hail storm) then the owner of the damaged property is generally responsible for the excess. Where more than one lot is damaged by the same event, then often the body corporate will pay the excess.
• For claims where a building or maintenance failure has caused damage (e.g. blocked gutters or burst pipe) then the entity responsible for the maintenance of the cause is generally responsible for the excess. For example when a burst pipe inside an upstairs unit causes damage to the unit below, the owner of the upstairs unit should generally pay the excess, as it was their obligation to keep that pipe that burst in good condition, so they are responsible for the damage caused by a failure of that pipe.

The body corporate may take out insurances in addition to the minimum statutory requirements, such as office bearers’ liability insurance, catastrophe insurance, financial fidelity insurance etc.

Although Strata Insurance includes common contents, make sure you also have your own contents cover for your belongings and for the elements Strata Insurance doesn’t cover. Make sure you speak to SMG about what is and isn’t included in your policy.

SMG recommends that lot owners and tenants hold their own insurance policies, to provide cover where the body corporate policy does not.

• Owner occupiers and tenants should have contents insurance for their own belongings
• Investor owners should have landlord insurance, which provides cover for tenancy issues

Liability limits are the maximum dollar amount of damages (“indemnity”) an insurance carrier will pay on your behalf. 

In the event of an insurance claim – the Insurer will set a limit of liability (usually based off a quotation they have obtained for the required resultant damage repairs). This means that they will not pay out above this limit. Some Bodies Corporate take some time to ensure that the cause of the event (common property roof leak) has been repaired. Should the cost of materials or labour increase after the time the insurer determines their limit of liability, they will not pay for any of these increased costs.

Insurance premiums are based on the assumption that the assets covered are insured for their full value at the inception date of the policy. If the assets are not insured for their full value an, insurer will typically treat the policy holder as being a co-insurer for all claims over 5% or 10% of the declared value. Many insurance policies allow a percentage of tolerance in getting it right. This is typically 15% (85% co-insurance) or 20% (80% co-insurance). There is no tolerance with some cover such as a standard Industrial Special Risks policy, or in some cases where the insured can be shown to have reasonably aware of the full value.

According to the Insurance Council of Australia, a “flood” is defined as: “The covering of normally dry land by water that has escaped or been released from the normal confines of: any lake, or any river, creek or other natural watercourse, whether or not altered or modified; or any reservoir, canal, or dam.”

Owners may request a cash settlement for their claim but there are some important items to consider.  Firstly if you do not intend to carry out the repairs, you must inform the Body Corporate.  This will also be noted by the Body Corporate’s insurer.  Secondly, you must sign/approve the release.  If you elect to receive a cash settlement and find that the repairs cost more than you receive, you may have no right to further recovery from the Body Corporate’s insurer.

The Body Corporate is the policy holder, or named insured, on the policy which covers the building and common property. As the policy holder, only the Body Corporate can sign building contracts or receive payments in relation to claims made against the policy.

A Deed of Settlement Release is an agreement and acknowledgement from the Body Corporate as the policy holder that they accept a settlement offer to be the accurate, complete, and final. Signing a Deed of Settlement Release serves to release the insurer from their liability to pay further amounts under the claim.

If you are aware that lot owners are using their units for short term holiday letting such as through AirBNB, you should notify your Body Corporate Manager so we can advise your insurer. In most cases this won’t affect your insurance, but it is a requirement under your policy to disclose anything you reasonably believe may affect the insurer’s decision to cover you.