Strata Insurance is mandatory in Australia and covers common property under a strata title or body corporate. When purchasing a unit or townhouse either for yourself or as an investment property, you will share the costs of this insurance with the other owners in the complex as part of your Body Corporate fees.
What is covered by Strata Insurance?
Strata Insurance generally provides cover for building and common property, against fire, theft, storm and water damage. The common areas may include floors, walls and ceilings, balconies, lifts, car parks, pools, spas and tennis courts. Each policy can vary, understanding your Strata agreement will assist in ensuring you have the cover most suitable.
You should also ensure there is insurance cover for Public Liability, insuring against any Third Party injuries, or Third Party property damage that may occur in any of the insured areas.
What isn’t covered under Strata Insurance?
It’s important not to assume that something is insured under the Strata Insurance, policies can vary between different insurers.
Generally personal items, furniture and appliances would not be covered by Strata Building Insurance, therefore ensure full review of your policy is carried out in the event you may require additional contents cover. Similarly this is also the case if your property is for investment and you plan to rent out a unit or townhouse, additional Landlord insurance would be required as an option.
How are Strata Insurance premiums estimated?
The basis for the strata insurance premiums would be on replacement value of the building. It is therefore important that this valuation is correct so that the property is neither underinsured nor over insured, both circumstances being undesirable. Overall valuation of the property include stamp duty and GST, age and condition of the building, risk profile of the location, and excess payments paid by the Body Corporate.
Additional factors that are assessed when a property is valued, include what might happen if the building is a total loss. For example, the building may need to be upgraded to current standards or it might need to be demolished completely and the debris removed before rebuilding can commence.
To speak to one of our insurance specialists about Strata Insurance, find your local adviser today.
The information provided is to be regarded as general advice. Whilst we may have collected risk information, your personal objectives, needs or financial situations were not taken into account when preparing this information. We recommend that you consider the suitability of this general advice, in respect of your objectives, financial situation and needs before acting on it. You should obtain and consider the relevant product disclosure statement before making any decision to purchase this financial product.