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.
- 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.