Management Corporation Insurance
Q: Is my unit covered by Management Corporation insurance?
A: The structure of the unit itself and its fixtures is covered but not the unit’s contents/chattel or a unit's public liability. It is recommended that owner residents take out contents insurance and investors take out landlord's insurance. Please note the following definition of fixture vs. chattel.
Fixture: Item is part of land or structure and is installed e.g. mirror glued to wall. Removal of item would require repair work. Item may be covered by Management Corporation insurance depending on policy/underwriter and policy wording in place.
Chattel: Item is personal property and moveable e.g. a mirror hung on hooks. Item is covered by unit owner's contents insurance. Please note that insurance policies define blinds, carpet and light fittings as chattel.
If a fixture is installed to benefit the unit owner or if the Management Corporation's consent was not obtained, that fixture may not be covered by insurance.
Check the policy guide of your Management Corporation insurance to learn more about items that may or may not be covered and cross-reference it with your private contents insurer to ensure that it is insured.
Q: What insurance do I need to take out?
A: It is the unit owner’s responsibility to take out Landlord Insurance or Content Insurance.
Landlord Insurance: Insurance cover can include Contents, Loss of Rent, Tenant Default, Legal Expenses, Liability, Professional Costs, and Audit Costs.
Contents Insurance: Insurance cover usually includes Contents/Chattel only.
Q: What can Management Corporation insurance cover?
A: The Management Corporation takes out one insurance policy that covers full replacement for all the buildings and adequate public liability insurance for the common property. Management Corporation insurance must be taken out to cover the buildings and legal liability.
- Building Insurance
- Building insurance does not include the land value but includes architect fees and removal of debris. The building itself is deemed to include all fixtures. This value should be determined by a property valuation at least every 5 years to determine the replacement value of the property. A desktop valuation may also be used in the interim to value the building.
- Legal Liability
- $2 million is the prescribed minimum in NT Units titles act, however 10million is most underwriters minimal complex cover but there is usually a nominal increase in cost to increase it to $20 million in case of legal liability for damages or loss incurred on common property.
Examples of additional cover for common property for some insurers can include: landscaping; loss of rent; re-letting costs; fidelity guarantee cover; legal defence costs; office bearers liability; and government audits.
Additional add-on policy items for a typical strata property include:
- Common Area Contents
- e.g. foyer contents such as a painting on foyer wall, common facilities being gym equipment, BBQ & outdoor furniture, but not contents of private car space
- Government Audit Costs
- covers audit costs as well as legal defence and appeal expenses
- Voluntary Workers
- covers unpaid workers with set duties and designated by vote of Management Corporation members and noted in minutes
- Fidelity Guarantee
- covers fraud of Management Corporation funds by agent or committee
- Office Bearers Legal Liability
- covers wrongful acts by committee or agent including legal representation
- Machinery Breakdown
- e.g. elevator
- covers replacement costs due to natural disaster i.e. earthquake, flood, cyclone
It is best to check the insurance policy for the coverage of your property, definitions, inclusions and exclusions, or ask your agent.
Q: How do I know what my Management Corporation insurance policy actually covers?
A: An insurance policy will be attached to the Notice of Meeting before your Annual General Meetings. New owners can check their Contract of Sale or welcome pack from the Management Corporation.
Otherwise you could contact your agent or insurer and ask for insurance details, a Certificate of Currency, or the Product Disclosure Statement.
Certificate of Currency: Statement from insurer regarding the insurance coverage for a property and the period of insurance coverage.
Product Disclosure Statement: Insurer’s policy definitions and defined coverage to assist in your decision making when taking out insurance.
CHU body corporate clients can download a Certificate of Currency for their property or to download the CHU Product Disclosure Statement.
Q: How do I make a claim?
A: If the claim involves private property and contents, then you should contact your insurer. If the claim involves damage or loss to common property, the agent should be notified as soon as possible. Your agent will notify the insurer and organise any required work on the common property or water trespass between units. Some agents may have an emergency after hours number to contact on their answering machine.
In the case of damage or loss, it is best to:
- provide your agent with the details of the incident and affected parties,
- allow unit access to tradespeople if need be,
- take reasonable steps to reduce further damage or loss
- inform police if damage is criminal
- leave damage alone, unless temporary repairs are a necessity
To claim for an invoice for partial work performed on common property, a tax invoice must be provided to the agent stating:
- Clear company details and ABN,
- Name and address of person being invoiced
- Date of repairs
- Breakdown of costs
- Description of repairs, including statement of cause of damage or loss
- Reasonable costs or an assessor will be appointed
Most policies will not cover property losses resulting from:
- Wear and tear or deterioration
- Poor design
- Poor workmanship
- Tree roots
For further enquiries about claims and claimable items, please visit CHU’s Claim FAQ
NT Management Corporation Insurance Requirements
The Financial Services Reform Act requires agents, or those who provide a financial service and arrange insurance, to be an Authorised Representative or Distributor before they can provide any general or factual advice. An agent appointed as a 'Distributor' may organise insurance and provide factual information whereas an 'Authorised Representative' can also provide advice.
A Financial Services Guide should be provided to body corporate members.
An agent should provide information of variance in cover to the Management Corporation and record the decision and confirmation of information or advice provided.
For further information, please visit Whitbread's Insurance Brokers' website or the CHU Insurance website.