Building Insurance For Strata Units: All Your Questions Answered 💡
With more inner city dwellings being developed into strata schemes or shared complexes, navigating life as a strata title owner is becoming increasingly common amongst the Aussie homeowners of today. Reading up on strata laws and regulations and developing a firm understanding of the scope of responsibilities that fall to your strata manager or body corporate, is essential for all those living and working in Australia’s larger city centres.
One particular element of strata schemes and title ownership that many homeowners and tenants alike may find confusing is securing insurance for your strata unit. Although building insurance is generally included in your annual strata fees for most strata schemes, this isn’t actually always the case, and as such strata title owners simply cannot afford to assume that they’re covered.
If you’ve ever needed questions answered surrounding your strata, then chances are you’ve either considered investing in homeowner strata consulting services for you and your fellow title owners, or at the very least have joined your strata committee in order to represent you and your fellow title owners. Whether you’ve already attended your first committee meeting or are still anticipating communications with your strata management team, you will benefit from coming prepared with your own questions surrounding building insurance.
That’s why we’ve taken it upon ourselves to answer some of the most common questions strata title owners may have regarding their strata insurance. Read on to strengthen your knowledge of your insurance needs as a strata title owner.
What kind of strata schemes provide business insurance?
As we mentioned earlier, in some instances, your building insurance can be included in the cost of your annual strata fees. This may only apply, however, to strata schemes that are registered under a Building Format Plan (or ‘BFP’). A BFP is a type of subdivision which is predominantly used for the development of multi-storey strata unit complexes, where strata title owners are more likely to share walls, floors, and ceilings.
Although BFPs are generally used for multi-storey strata schemes like apartment complexes, they can still apply to any other developments like townhouses, villas, units, or housing estates. The reason for this is that dwellings in these developments are still likely to share property elements or structures like walls, fences or driveways. For strata units with shared structures, it’s simply easier for strata management to provide business insurance that covers the entire strata scheme rather than having strata title owners secure their own building insurance.
This in a nutshell, is why strata managers overseeing strata schemes that have been registered as BFP subdivisions are required to organise both building insurance as well as public liability cover for common property. Public liability cover is required to cover any injuries, incidents, or resulting damage that may occur on or to common property, like driveways, garden spaces, building gyms or pools, and rooftops.
Do you need building insurance for strata units?
As you may imagine, understanding whether you need to secure your own building insurance as a strata title owner is reliant on whether or not your strata scheme has been registered as a BFP subdivision. If your strata scheme is a BFP, then chances are high that your strata fees will include building insurance. Contrastingly, if your strata scheme hasn’t been registered with your local council as a BFP subdivision, then there’s a chance that you may need to secure your own building insurance.
You can check the type of subdivision that your strata scheme or complex has been developed as by finding the relevant documents in your lot’s Section 32 contract, or even by placing an inquiry with your strata committee or strata management team for more information. If your strata scheme isn’t a BFP but you believe that your building insurance is indeed covered by your strata fees, having a read through your strata documents outlining the breakdown costs of your annual levies can help provide some insights into what you may be paying for.
What’s covered by building insurance for strata units?
If your building insurance is included in your annual strata payments, the next thing that you’ll want to familiarise yourself with is exactly what is covered by your strata’s insurance policy. Generally speaking, the building insurance as provided by your strata management team covers the exterior of your building, all common property on your strata scheme, and all contents that are as defined on the title for that strata lot, these being built-in fixtures or kitchen appliances that come with the property, as well as toilets, baths, shower fixtures, electrical outlets and wiring, and included flooring like floorboards, tiling, or carpeting that have come included with your strata title.
As household fixtures are covered by your building insurance, you may be covered in the event of a burst pipe or any particular electrical faults in and around your home. It’s common for strata insurance claims revolving around household faults to be considered on a case-by-case basis.
Simply put, your building insurance is likely to cover all common or shared areas, elevators, car parks, and shared building amenities like rooftops, gym or pool facilities, and garden spaces, as well as the interior features we’ve outlined above. As the exterior of your building is covered by your strata’s building insurance, any damage or loss caused by accidents, adverse weather conditions, or even theft of design elements that make up your home’s facade will be covered by your strata insurance. But theft of your home’s contents will unfortunately not be covered by your strata insurance, which brings us to our final question and answer.
What additional insurance may I need for my strata unit?
The major gap in cover for your strata’s building insurance is that theft of your home’s contents is not covered. This is a logical gap in cover, as there’s no way your building insurance as provided by your strata management team, could effectively valuate the total sum of your personal assets or belongings. As all the lots within a strata scheme come with their own property valuations, it’s easy enough for insurance agencies and strata managers to ensure that their building insurance policy is for a large enough sum to cover the full replacement of each building on individual lots.
Contrastingly, it’s up to strata title owners to secure contents insurance for their homes, to ensure that they are covered in the event that they fall victim to theft or a break-in. Another insurance policy you may need to secure for yourself as a strata title owner is landlord’s insurance, that is in the event that your strata title will be placed on the rental market.
Now that you know what to expect from your strata and building insurance, you’ll likely have developed a clearer understanding of where you may and may not be covered as a strata title owner. If you have additional questions surrounding your strata fees and provided building insurance, be sure to raise those questions to your strata committee, in email communications with your strata management team, or perhaps even at your next general or quarterly meetings.
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