Not every homeowner owns a house that’s distinctly separated from the property of their neighbours around them. For millions of Australians, home is an apartment in a dense residential complex or high-rise building, or a house in the heart of a major subdivision. But because in such cases, key facilities are shared with hundreds of other residents, proper home insurance fails to offer complete protection. It’s where residential strata insurance comes into play.
Admittedly, the concept of strata insurance (whether for residential or commercial coverage) can be a little confusing. At Hamilton Brokers, we’ve been working closely with body corporate committees and strata managers in the ACT to understand the intricacies of this residential insurance element for decades, an element that is required by law but may differ between state and territories. We also offer the same expertise to committees and managers in the states of NSW, Queensland, and Victoria.
So what are the details that you should know? What are the crucial facts that are key to understanding the real value that residential strata insurance provides homeowners in multi-home building complexes and sub-divisions?
We’ve put together a shortlist for you to help clear the mist and clarify what it is all about.
8 Important Strata Insurance Facts to Know
One. When and Why? – Strata insurance emerged as a result of the introduction of Strata Titles in the early 1960s in NSW. Strata titles addressed the issue of ownership where elements of a property are actually shared by several independent lot (home) owners. If ownership is an issue, then insurance protection is going to be an issue, too.
Two. Residential Strata Insurance is Mandatory – Like many types of property insurance, it is mandatory for owners of strata titles to have strata insurance. Each Australian state and territory has its own relevant legislation so the terms and costs can be different
In the ACT, for example, the area is covered by two different pieces of legislation. Either the Community Title Act 2001 (CTA), which relates to unit plans, different forms of housing, recreational facilities, shops, parks and car parking etc, or the Unit Titles Act 2001 (UTA), which is limited to housing, common property, and unit subsidiaries. But the requirement to have adequate protection is consistent.
For more details on each state’s legislation, check out the legislation page on StrataCommunity.org.au or The Law of Strata Title in Australia, published in the Australian Property Law Journal in 2006.
Three. What Facilities are ‘Shared’? – Shared features in the modern multi-unit residential complexes are common areas that permit entry, exit, and general movement around the residential complex. These shared or common areas are always clearly defined in the title of any property, but they can differ depending on the design of the residential complex. Typically, however, they include:
– Car Parks
Four. Strata Insurance Protects Residents – The problem with features such as these in insurance terms is that, since they belong to no one and to everyone at the same time, coverage in any policy is difficult to ascertain. Through strata insurance, residents are provided liability cover in the event they may be injured on shared or common property – for example, should you fall down their stairwell or be injured by the doors of the apartment block lift.
Five. The Insurance Premium is Shared – The cost of the residential strata insurance premium is shared among the individual owners of strata titles, or properties. It is the fairest way to secure protection for every resident who may be using the common areas or facilities.
Six. Premiums May be Different – The insurance premium charged can differ from one building complex to another. These premium differences might exist even for buildings on the same street, not just those that are located in different cities or districts. The reason is that the particular factors that an insurer may apply when underwriting the risks relating to each individual complex. These can include:
- Government taxes – what stamp duty and GST is charged on insurance
- Building age and condition – to what degree is risk increased by the general condition of the complex
- Building replacement costs – what the overall cost would be should the building suffer significant damage
- Risk profile – this is related to the risks that exist in the building’s particular location. For example, is the building in an area known for cyclone, flooding, bush fire, or earthquake activity?
- Claims history – what claims are already associated with the strata complex
- Common property costs – assessing the costs of maintaining common facilities like car parks, stairwells, fire protection systems, lifts, etc.
Seven. Residential Strata Insurance Does NOT Cover Everything – Like all insurance policies, strata insurance has its share of exclusions. The list differs from insurer to insurer, so it is important that you read the details of the policy – and understand them – before signing up to it. Often, the exclusion relates particular insurance risks or features, like the risk of damage from landslides to the exclusion of some features like boundary fencing.
Eight. Strata Insurance Is NOT Home Insurance – It would be incorrect to assume that getting covered for common property means getting your possessions at home covered. Strata insurance relates to common property and facilities only. Contents and personal items in your home should be covered by general home insurance policies.
Residential Strata Insurance from Hamilton Brokers
As already mentioned, we, at Hamilton Brokers, have been working closely with body corporate committees and strata managers in ACT, NSW, Queensland, and Victoria to provide the most comprehensive residential strata insurance protection for our clients.
As one of the leading insurance brokers operating in each of these states, we have access to Australia’s top six premier insurance providers from where the best policies at the best premiums can be sourced. Not only that, but our commitment to superior services means we do more for our clients by negotiating the best premium and the best cover, and always acting in their particular interests.
For more on the commercial and residential strata insurance protection we can offer you, check out our dedicated website, HamiltonBrokers.com.au. Alternatively, fill out our online enquiry form to request information, or contact us directly at (02) 6124 1250.
This information may be regarded as general advice. That is, your personal objectives, needs or financial situations were not taken into account when preparing this information. Accordingly, you should consider the appropriateness of any general advice we have given you, having regard to your own objectives, financial situation and needs before acting on it.