Strata Insurance and Renovations: Considerations and Coverage Guidelines

Dec 17, 2023

At Trident Insurance Group, we understand the complexities and unique challenges that come with managing strata-titled properties, particularly during renovations. As trusted insurance brokers in Perth with over three decades of experience, our focus is on providing customised insurance solutions that cater to the specific needs of our clients. 

We are committed to ensuring that your strata property is adequately protected, both during and after renovation works. Our expertise in navigating the intricacies of strata insurance means we’re well-equipped to offer guidance on valuation, liability, and compliance with local regulations. For tailored insurance advice and coverage that secures your investment, trust Trident Insurance Group. 

Understanding strata insurance 

Strata insurance, commonly referred to as body corporate insurance in Australia, plays a crucial role in providing a safety net for properties under the management of a strata title or body corporate entity. 

This form of insurance is not just an optional safeguard but a mandatory requirement across Australia, including in Perth and the broader Western Australian region. It is designed to protect the collective interests of all lot owners in a strata scheme by covering the shared or common property elements. 

The coverage provided by strata insurance is quite comprehensive, encompassing several key areas: 

Building coverage: This is perhaps the most significant aspect of strata insurance. It covers the physical structure of the building, including the roof, floors, walls, ceilings, and fixed installations like kitchen cabinets and bathroom fixtures. This coverage is critical in ensuring that the building’s structure is protected against various risks, such as fire, storm damage, or other unforeseen events. 

Public liability insurance: Public liability coverage is an essential component of strata insurance. It protects the body corporate and its members against legal liability in case someone is injured or their property is damaged while within the common areas of the strata property. This coverage is particularly important as it safeguards the body corporate against potentially costly legal claims. 

Common contents insurance: This part of the strata insurance policy covers items that are collectively owned by the body corporate. This can include things like furniture in common areas, garden equipment, or shared appliances. It’s a vital coverage aspect, especially in larger strata properties with extensive common areas and shared facilities. 

What does it not cover? 

While strata insurance provides extensive coverage for common areas and elements, it’s important to highlight its limitations. Notably, strata insurance typically does not extend to cover: 

Individual lot contents: Personal belongings and contents within an individual lot owner’s property are not covered under strata insurance. Lot owners are generally advised to take out their own contents insurance to protect their personal possessions against risks like theft, damage, or loss. 

Renovations within private lots: Any renovations or improvements made within an individual lot, such as kitchen remodels or bathroom upgrades, are usually not covered by the standard strata insurance policy. These alterations are considered the individual lot owner’s responsibility, and separate coverage should be considered to protect these investments. 

Renovations and strata insurance implications 

When planning renovations in a strata-titled property, it’s important to consider how these changes may affect your strata insurance policy. Renovations can range from minor cosmetic updates to significant structural changes. Depending on the extent of the renovations, they may impact the building’s value, safety, and compliance with regulations, which in turn can affect the insurance coverage. 

Informing the strata committee or body corporate 

Prior to commencing any renovation work, it’s essential to inform and seek approval from the strata committee or body corporate. This step is crucial as it ensures that the renovations comply with the strata scheme’s by-laws and regulations. Failure to obtain proper approval can lead to disputes and potential non-compliance issues. 

Reviewing the existing strata insurance policy 

Before undertaking renovations, review the existing strata insurance policy to understand what is covered and what is not. It’s important to check if the policy includes coverage for improvements or if additional coverage is required. In some cases, significant renovations might necessitate a reassessment of the building’s insured value. 

Understanding the type of renovations 

Cosmetic renovations: These generally include non-structural changes like painting, replacing floor coverings, or updating fittings. Cosmetic renovations usually do not require changes to the strata insurance policy. 

Minor renovations: These might involve minor structural changes, plumbing, or electrical work. Approval from the strata committee is often required, and these changes may need to be noted on the insurance policy. 

Major renovations: Significant structural changes fall into this category. They will likely impact the insurance policy, potentially requiring a reassessment of the property’s value and insurance coverage. 

Coverage guidelines 

Coverage guidelines play a pivotal role in managing the insurance needs of a strata-titled property, particularly when it comes to renovations. These guidelines ensure that both the individual lot owners and the body corporate are adequately protected against various risks and comply with the relevant legal requirements. Let’s delve deeper into these guidelines: 

Valuation of the property  

Importance of accurate valuation: Post-renovation, the value of a strata property often increases. To ensure the insurance coverage reflects this new value, a professional revaluation of the property is advisable. Accurate valuation is crucial in determining the right level of insurance coverage. 

Risks of underinsurance: In the event of underinsurance, where the insurance coverage is less than the actual value of the property, lot owners and the body corporate can face significant financial challenges in the case of damage or loss. Underinsurance can lead to a situation where the compensation received from an insurance claim is insufficient to cover the cost of repairs or rebuilding. 

Periodic revaluations: Regular revaluations, particularly after significant renovations, help in maintaining adequate insurance coverage. This practice ensures that the insurance policy is always in line with the current market value of the property. 

Liability coverage 

Increased risks during renovations: Renovation activities can elevate the risk of accidents or damage to the common property. This necessitates a careful review of the existing public liability coverage within the strata insurance policy. 

Contractor insurance: It’s essential to ensure that all contractors and subcontractors engaged in the renovation works have their own valid insurance policies, including public liability insurance. This helps in mitigating the risk and potential liability for the body corporate. 

Enhanced public liability coverage: Depending on the scale of the renovations, it may be prudent to enhance the public liability coverage of the strata insurance during the renovation period to cover any additional risks. 

Compliance with building codes and regulations 

Adherence to local regulations: All renovation works must adhere to the building codes and regulations specific to Perth and Western Australia. This compliance is not only a legal requirement but also a critical factor in maintaining the validity of insurance claims. 

Impact on insurance claims: Non-compliance with building codes and regulations can lead to legal complications and can negatively impact insurance claims. In some cases, insurance providers may refuse to cover damages that arise from non-compliant renovation works. 

Notification and documentation 

Keeping stakeholders informed: It is crucial to keep the strata committee and insurance provider informed about the details of any renovation projects. This includes the nature of the work, the expected duration, and any significant changes being made to the property. 

Maintaining thorough records: Documentation of all renovation activities, including plans, approvals, and correspondence, should be meticulously maintained. This record-keeping is vital not only for insurance purposes but also for maintaining transparency and compliance within the strata scheme. 

Final words 

At Trident Insurance Group, we are dedicated to offering specialised insurance solutions tailored to the unique needs of each client. Our services are structured under several key areas: 

Our expertise 

With over three decades in the insurance industry, we bring a wealth of knowledge and experience to every client interaction. Our team in Perth is well-versed in the local and national insurance landscape, ensuring relevant and effective coverage. 

Tailored insurance solutions 

We understand that each client has unique needs. Our approach involves creating customised insurance plans that align perfectly with your specific requirements, whether for personal or commercial purposes. 

Comprehensive service range 

Our services extend across a variety of insurance types. From strata and business insurance to personal coverage, we provide comprehensive solutions to protect your assets and interests. 

Customer-centric approach 

At Trident, the client always comes first. Our commitment is to deliver exceptional service, with a focus on understanding and meeting your individual insurance needs. 

Local knowledge and compliance 

Being based in Perth, we are experts in local regulations, ensuring that your insurance solutions are not only comprehensive but also compliant with regional requirements. 

For expert guidance and a personalised approach to your strata insurance needs, consider partnering with Trident Insurance Group. Our team is committed to providing you with tailored solutions that align with your unique requirements. Whether it’s for your personal assets or commercial interests, we’re here to ensure your peace of mind. Reach out to us to explore how we can assist you in securing comprehensive and compliant insurance coverage. 

Feel free to reach out to our insurance expert today for more information.