Owners Corporation Insurance
Is my unit covered by Owners Corporation insurance? 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 is covered by Owners Corporation insurance.
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 Owners Corporation's consent was not obtained, that fixture may not be covered by insurance. Check the policy guide of your Owners 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.
What other insurance do I need to take out?Landlord Insurance
Landlords insurance is insurance cover for strata property owners who are renting out a unit/apartment to tenants. It is important as it provides cover for accidental loss or damage to contents in your unit from events such as fire, flood or storms. It covers items such as carpets, light fittings, curtains, blinds and washing machines as well as loss of rent if the unit is unfit to be occupied. Additionally, it covers you and your investment property for malicious damage to contents/buildings caused by tenants and/or their guests. It also covers you if your tenant fails to pay rent. Insurance cover can include Contents, Loss of Rent, Tenant Default, Legal Expenses, Liability, Professional Costs, and Audit Costs.
Contents insurance is insurance cover for household and personal possessions such as clothing, jewellery, furniture, TV, computers, internal carpets, blinds and electrical appliances belonging to yourself and your family of repairing or replacing your household and personal possessions in the event of loss or damage. Insurance cover usually includes Contents/Chattel only.
The Owners Corporation takes out one insurance policy that covers full replacement for all the buildings and adequate public liability insurance for the common property. Owners Corporation insurance must be taken out to cover the buildings and legal liability.
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.
$10 million is the prescribed minimum 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.
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, but not contents of private car space
Government Audit Costs
Covers audit costs as well as legal defence and appeal expenses
Covers unpaid workers with set duties and designated by vote of Owners Corporation members and noted in minutes
Office Bearers Legal Liability
Covers wrongful acts by committee or manager including legal representation
Covers fraud of Owners Corporation funds by manager or committee
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 strata manager.
How do I know what my Owners Corporation insurance policy actually covers?An Owners Corporation 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 Owners Corporation.
- Otherwise you could contact your strata manager or insurer and ask for the owners corporation's 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 owners corporation insurance clients can download a Certificate of Currency for their property or to download the CHU Product Disclosure Statement.
How do I make a claim?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 strata manager should be notified as soon as possible. Your strata manager will notify the insurer and organise any required work on the common property or water trespass between units. Some managers 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 strata manager 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
- 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
- Wear and tear or deterioration
- Poor design
- Poor workmanship
- Tree roots
Owners Corporation Insurance RequirementsThe Financial Services Reform Act requires strata managers, 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. A strata manager appointed as a 'Distributor' may organise insurance and provide factual information whereas an 'Authorised Representative' can also provide advice.
- A strata manager should provide information of variance in cover to the Owners Corporation and record the decision and confirmation of information or advice provided.
- A Financial Services Guide should be provided to body corporate members.
- For further information, please visit Whitbread's Insurance Brokers' website or the CHU Insurance's website