When buying a strata property, there are many important things to consider, not the least of which is strata insurance. As many building defects continue to be reported in the news, it is crucial to check that you have the right insurance cover, as well as what might affect your premiums.
What is strata insurance?
Simply put, strata insurance is insurance that covers buildings with a shared property in the instance of events such as extreme weather and break=ins. Also known as body corporate insurance, it is normally shared between body corporate members under the management of the strata title or body corporate entity.
This form of insurance is mandatory and must also cover public liability for any individuals who may be injured on common property. Typically, the owners of strata units will share the premium costs of the insurance as a part of their standard strata fees and liabilities.
What does strata insurance cover?
Strata insurance covers any damage caused to strata properties such as apartments and townhouses, and includes cover for lost rent and temporary accommodation. It covers shared and common property areas including:
- Garden equipment
- Swimming pools
- Car parks
- Walls, ceilings and floors
What does strata insurance NOT cover?
Most importantly, strata insurance does not cover the contents and personal items of your strata property. Furthermore, as with other forms of insurance, there may also be restrictions and exclusions in instances like landslides or floods.
What factors affect the strata insurance premium?
There may be a number of factors that will affect your insurance premium. These include, but are not limited to:
- State law requirements
- Government taxes (eg. stamp duty and GST)
- Age and condition of the building
- Replacement cost of the building
- Location of the building (some areas are more prone to natural disasters than others)
- Vulnerability of the building to events like building codes, design and materials
- Claims history for the building
- Commercial activities held on the premises (eg. holiday letting)
- Costs of common property such as car parks, stairwells, pools, and fire protection systems
- Fee and commissions from agents
- The level of excess payment selected by the body corporate
Other types of insurance
We highly advise that you still take out other forms of insurance in addition to the strata building insurance. For example, if you are an owner-occupier, contents insurance will cover your personal belongings and items such as light-fittings, blinds, appliances, and more.
If you are a landlord renting out your strata property, we also recommend landlord insurance. Many mortgage lenders will specify that you must purchase this insurance before tenants can move into your property, but more importantly, it will cover you for events such as:
- Theft or damage by tenants or guests
- Legal expenses against a tenant
- Liability if claims are made against you
- Loss of rent if a tenant leaves early or defaults on payment
Do you have questions about the types of insurance covering your strata property? Get in touch with our team today for more information on our range of strata services or explore our document bank for more information.