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Understanding Strata Insurance

Understanding Strata Insurance

Stra­ta insur­ance is a spe­cif­ic type of insur­ance pol­i­cy that cov­ers the build­ing, com­mon prop­er­ty, and com­mon area con­tents of a stra­ta scheme. It is manda­to­ry to hold stra­ta insur­ance which con­forms to each state’s rel­e­vant leg­is­la­tion in Aus­tralia. Here is what you need to know about stra­ta insur­ance:

What is cov­ered by stra­ta insur­ance?

  • Stra­ta insur­ance typ­i­cal­ly cov­ers com­mon area con­tents, the build­ing, and shared prop­er­ty in the event of loss or dam­age.
  • Com­mon prop­er­ty includes recre­ation­al facil­i­ties such as a pool, ten­nis court, gym­na­si­um, entry foy­ers, garages, infra­struc­ture, etc.
  • Stra­ta insur­ance cov­ers spe­cif­ic items that the stra­ta cor­po­ra­tion owns such as com­mon assets, com­mon prop­er­ty, and build­ings that are shown on the stra­ta plan.
  • Stra­ta lia­bil­i­ty insur­ance must be for a min­i­mum of $2 mil­lion.

What is not cov­ered by stra­ta insur­ance?

  • Stra­ta build­ing insur­ance does not cov­er your par­tic­u­lar unit, whether it be a con­do, town­house, sin­gle-fam­i­ly home in a stra­ta com­plex, etc.
  • Stra­ta insur­ance excludes any con­tents, fix­tures, or fit­tings that have been installed by the unit own­er.
  • Stra­ta insur­ance does not cov­er wear and tear of your belong­ings, dam­age caused to com­put­ers result­ing from a virus, and fix­tures attached to your home.

Fac­tors that affect stra­ta insur­ance pre­mi­ums

  • The age, design, and con­di­tion of build­ings in the stra­ta scheme.
  • The building’s appli­ca­tions and whether com­mer­cial activ­i­ties are being per­formed.
  • The risk pro­file of your loca­tion, with greater sus­cep­ti­bil­i­ty to dam­age equalling a high­er pre­mi­um.
  • The amount of excess that the body cor­po­rate has cho­sen to pay upon mak­ing a claim.
  • The stra­ta scheme’s insur­ance claims his­to­ry.
  • Insur­ance pre­mi­um tax­es.

Addi­tion­al infor­ma­tion

  • Stra­ta unit own­ers and their ten­ants often get their own insur­ance for their indi­vid­ual needs. These insur­ance poli­cies may cov­er per­son­al pos­ses­sions, addi­tion­al liv­ing expenses/loss of rental income, bet­ter­ments and improve­ments to the unit, loss assess­ments, and per­son­al lia­bil­i­ty cov­er­age.
  • Stra­ta fees only pay for the stra­ta corporation’s insur­ance; stra­ta fees do NOT pay for homeowner’s or tenant’s insur­ance.
  • Stra­ta insur­ance pric­ing is set by insur­ance com­pa­nies (insur­ers) that under­write the stra­ta prop­er­ty.
  • It is impor­tant to review all stra­ta doc­u­ments in detail pri­or to a firm deal and ensure that your per­son­al insur­ance pol­i­cy match­es those deductibles so you are cov­ered in the event of major leak or sew­er back up.

In sum­ma­ry, stra­ta insur­ance is a spe­cif­ic pol­i­cy that cov­ers the build­ing, com­mon prop­er­ty, and com­mon area con­tents of a stra­ta scheme. It is impor­tant to under­stand what is cov­ered and what is not cov­ered by stra­ta insur­ance, as well as the fac­tors that affect stra­ta insur­ance pre­mi­ums. It is also impor­tant to review all stra­ta doc­u­ments in detail pri­or to a firm deal and ensure that your per­son­al insur­ance pol­i­cy match­es those deductibles so you are cov­ered in the event of major leak or sew­er back up.

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