What Are The Insurance Requirements for a Strata Complex?

Aug 17, 2022

Commercial and Residential Strata Insurance covers the specific insurance needs of owners of units and offices.


Commercial and residential strata insurance is issued to the Owners Corporation (previously Body Corporate). The owners corporation of each property is obligated to take out strata insurance to cover the building, common area contents, and additional legal liability.

Holding strata insurance is mandatory under each state’s strata legislation.

Owners corporations and strata managers should always obtain the right advice about which available coverage suits their particular  requirements.  Some strata policies meet the minimum legislative requirements, however don’t always provide owners with the added protection that they really need.

Trident Insurance offers a range of strata policies, which can be tailored for each complex.


What is Strata Insurance?


This policy covers the Owners for loss or damage to their building and the common contents. In addition, it indemnifies the owners corporation in the event of personal injury or third-party property damage that occurs on the premises. Whether you’re a strata administrator, council member, or strata owner, it’s important to protect your investments and avoid the many risks that can affect residential and commercial strata in Australia.


What Does Strata Insurance Cover?


Strata Insurance protects the building and any common or shared property, as well as the contents of the owners’ corporations. The type of insurance cover and cost may vary depending on its location and how much common property is shared.

For an owners corporation, the minimum amount of insurance that is required is:

Reinstatement or replacement insurance – All Owners Corporations (except two-lot subdivisions) must purchase reinstatement or replacement insurance for all buildings that are part of the common property.


Your Insurance Must Cover

  • Shared services
  • Replacement of services and structures, such as driveways or fences.
  • Reconstruction, repair and replacement of the property damaged
  • The costs for demolishing and removing the debris from the site
  • Additional costs like hiring an architect/surveyor

Public liability insurance for common property – public insurance covers the Owners Corporations responsibility to pay for any injury, illness, death, or loss of property.


Additional Coverage

Your Owners Corporation may choose to purchase additional insurance to protect the rights of its lot owners.

Strata insurance is compulsory and covers common property and building damage:

  • Theft
  • Storm
  • Water damage
  • Fire

Some common areas the insurance policy may cover include:

  • Car parks
  • Lifts
  • Balconies
  • Floors
  • Windows
  • Ceilings
  • Walls
  • Wiring
  • Spa areas
  • Tennis courts
  • Garden equipment

Every state has its own requirements, and each policy is different. One of Trident Insurance Consultants will help explain your strata insuranceso that you get the best coverage for your needs.


Optional Coverage


  • Common property contents (for items like carpets and paintings in foyers)
  • Workers’ compensation
  • Fidelity Guarantee
  • Machinery breakdown
  • Legal liability of office bearers
  • Voluntary workers’ insurance (a type of personal accident coverage)
  • Catastrophe insurance
  • Improvements by lot owners to the building
  • legal defence expenses
  • government audit costs
  • Appeal expenses


What Doesn’t Strata Insurance Cover?


Many people mistakenly believe that Strata Building Insurance covers the Owners’ Corporation for routine maintenance items and building defects. This includes the repair of leaking shower trays, settlement/movement cracks within walls and ceilings, or concrete cancer. Unfortunately, this is not true. Motor vehicle insurance is the easiest to compare. Although you can insure your car against an accident, you are not allowed to insure your vehicle against wear and tear. The same principle applies for Strata Building Insurance.


Tenant’s Contents Insurance


Renters are advised to purchase renter’s contents coverage to protect their personal possessions while they are living in their unit.


Unit Owners Contents – Owner-Occupied


Personal contents are not included in a strata insurance policy.To protect their personal property and to avoid liability, owners should get a contents policy.


Landlords’ Contents


The landlord policy protects the unit owner’s contents (i.e., printer, fridge, furniture, etc.) as well as their liability as a landlord.

Here’s a list of items that strata insurance doesn’t generally cover. It is important to understand that this will vary depending on the strata laws in each state or territory.

  • Anything that is defined as having common contents
  • Blinds, curtains and carpets.
  • Ceiling or fixed floor coverings
  • Paint, tiles, wallpaper.
  • Trees, shrubs, plants, hedges.
  • Inflatable or portable swimming pools
  • Temporary buildings, such as houseboats, caravans, and mobile structures.
  • Buildings that are currently under construction
  • Timber floors that were installed at the time of construction.


Key Area of Focus for Strata Insurance: Correct Building Replacement Value


It is vital that property be valued at its replacement cost in order to ensure that a claim is paid fully by the insurer. To keep the property’s value current, we recommend that every three years a professional insurance replacement cost valuation be done.


Why Should I Contact Trident Insurance?


As experts in this area, we work closely with our clients to understand their unique needs. We also review the coverage with you annually to make sure it correctly covers your  situation.

Contact one of our Strata Insurance Consultants today to obtain a competitive quote for your Commercial or Residential Strata Insurance.

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