Making sense of what’s covered when it comes to insurance for your strata property can be confusing – especially when you factor in other policies like contents insurance and landlord insurance. To make things easier, we’ve created a handy guide to insurance requirements in NSW strata schemes.
What does strata insurance cover?
Under a strata scheme in NSW, the owners corporation is legally required to take out strata insurance cover for the building, common property and common contents managed by the owners corporation.
Strata insurance covers the following:
- Common property such as common areas, car parks, stairwells, lifts, gardens, and common floors, walls, and ceilings
- Common contents such as communal furniture, equipment, and appliances
- Fixtures and fittings that cover common areas of the building such as ducted air conditioning, balconies, water pipes and sewage pipes
- Reinstatement and replacement insurance for buildings on common property
- Public liability insurance for common property areas
- Voluntary workers insurance to cover people carrying out voluntary works on behalf of the owners corporation
Strata insurance doesn’t cover any personal contents in individual units or lots. For coverage of your own property, there are a couple of options:
If you’re an owner-occupier in a strata building, you’ll need to take out content insurance to protect your personal assets. Contents insurance isn’t compulsory, but it’s recommended to protect your items – especially valuable assets.
Contents insurance typically covers anything that isn’t included in a strata insurance policy, such as furniture, appliances, clothing, jewellery, internal carpets, light fittings, and blinds – in other words, anything that doesn’t form part of the building structure.
If you rent out your strata property, you’ll need a landlord insurance policy. While not strictly mandatory, many mortgage lenders will require you take out landlord insurance before you can have tenants live at your property.
Landlord insurance covers contents you own inside your property, such as fixtures and fittings, including blinds, carpets and light fittings. It can also provide cover in events such as:
- Theft or damage by the tenant or their guests
- Legal expenses if you take action against a tenant
- Liability if a claim is made against you
- Loss of rent if the tenant defaults on their payments or leaves early
While most contents insurance policies generally cover you for things like damage to the building, fixtures and fittings, or damage from natural disasters, they won’t cover you for expenses incurred as a result of tenants’ actions.
What are the requirements for taking out strata insurance in NSW?
In NSW, there are a number of requirements for taking out strata insurance:
- The strata manager must provide the owners corporation with at least three written quotes from different insurers when renewing a policy
- Strata managers must disclose at Annual General Meetings (AGMs) the value of insurance commissions they receive, if applicable
- The minimum limit of Public Liability Insurance is $20,000,000
- The sum for which the building is insured must be reviewed annually to make sure it’s up to date with the Consumer Price Index (CPI)
Insurance for strata properties in NSW is a complex business. To find out more about what’s required, get in touch with our strata management specialists.