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What is Strata Insurance?

strata insurance

Strata Insurance Explained

Whether you are a Strata Manager, Council Member, or Strata Owner, it is important to protect your investments from the many risks effecting Residential and Commercial Strata’s in Australia. The foundation of a Residential or Commercial Strata policy is based on covering the Building and Legal Liability for Strata Corporations and their owners. Traditionally this covers the Owners from Loss or Damage to the Building and Common Contents as well as indemnifying the Body Corporate for sums they become legally liable to pay with respect to third party property damage and personal injury which occur at the premises or within Australia.

What is in a Strata Property insurance policy?

Strata Insurance policies have evolved to include a wider scope of coverages, such as:

Loss of Rent/Accommodation

If a unit becomes uninhabitable following an insured event, the owner can claim for loss of rent or alternative accommodation whilst the premises are unfit for occupancy.

Catastrophe Following a Catastrophic Event (i.e. earthquake, bushfire, tsunami, or cyclone)

An additional sum can become available to assist in the escalating costs of the claim. The limit of insurance for this cover is usually either 15% or 30% of the building Sum Insured value.

Office Bearers Liability

This coverage protects the members of the committee (which may include the Strata Manager acting on the committee’s behalf) against the liability and legal costs (up to the sum insured) where liability has arisen from an alleged or wrongful act, omission, or breach of duty (fraudulent acts are not insured under this section).

Fidelity Guarantee Protection

This coverage is for the Owners Corporation against fraudulent embezzlement/misappropriation of the Owners Corporation’s funds and assets.

Voluntary Workers

This insures voluntary workers against bodily injury, inability to work, or death as a result of an accident which occurs while they are undertaking voluntary work for the strata company.

Audit Costs/OHS Breaches

Covers professional costs in connection with the ATO and the Office of Business and Consumer Affairs as well as the legal expenses incurred in appealing against an improvement or prohibition notice brought under any workplace, occupational health, safety, or similar legislation.

Legal Defense Expenses

Covers legal defence costs where the Strata is joined in litigation with another party, as well as the costs of expenses incurred in defending actions brought against the Body Corporate.

Lot Owners Improvements

This coverage is for fixtures and structural improvements installed or upgraded by Lot Owners for their exclusive use.

Machinery Breakdown

Provides protection against unforeseen physical destruction/damage to electrical, electronic and mechanical machinery and plant – also includes lifts, elevators and escalators.

Workers Compensation

Indemnifies the Body Corporate for legal liability to their employees under workers compensation legislation. A good example of this being relevant: if a tradesman has an accident on a complex with no WC cover, the liability could fall back on the Strata.

Key Areas of Focus in Strata Property Insurance

To ensure a claim is fully paid by the insurer, it is important that the property is valued at its full replacement cost. We recommend having a professional insurance replacement cost valuation completed every 3 years to keep the value up to date

Common contents are covered through a Strata policy include:

Contents owned by the Strata Company

Such as common area furniture, paintings, poolside chairs, and gym equipment.

Lot Owners Improvements

For example fixtures or structural improvements installed by a lot owner for their use. These fixtures must be permanently attached or fixed to the building, becoming legally part of it. Floating Floors are generally not included in this section but can be included for an additional premium.

Personal contents are not covered under a Strata policy, such as:

Tenant’s Contents

Tenants should purchase their own Renter’s Contents policy to protect their personal belongings and liability whilst living in the unit.

Unit Owners Contents (Owner-Occupied)

Owner Occupiers should purchase a Contents policy to protect their personal belongings and liability whilst living in the unit.

Landlords Contents

Whether the unit it is being rented out for Commercial or Residential purposes, a Landlords policy will be necessary for this coverage. The Landlord policy insures the unit owner’s contents that the tenant is utilising (i.e. printer, fridge, furniture etc.) as well as Liability as a Landlord.

In addition to contents insurance protection, a Landlords policy also provides protection against a tenant defaulting on rental payments, something the Strata policy does not insure against.

A Landlords policy will typically respond if;

  1. The tenant decides (for whatever reason) to no longer pay rent.
  2. Is evicted.
  3. Simply abandons the unit and lease.

Most policies automatically cover fusion of electrical motors under 5HP in the Insured Property section. Smaller strata complexes with small wall mounted AC units may not require this cover. Larger strata complexes with lifts, elevators, chillers, boilers, or any other large type of electronic or mechanical machinery are recommended to include Machinery Breakdown cover on their policy.

Cover for the insured machinery is usually subject to a current comprehensive maintenance agreement being in place. The effects of wear and tear, corrosion and poor maintenance will likely prevent the policy responding to any claims made under this section.

Differences in Strata & Landlords Policies

Temporary Accommodation

The Strata policy will respond if the unit owner requires temporary accommodation following a loss, provided that the unit was owner occupied and the loss renders the unit uninhabitable.

Loss of Rent

The Strata policy will respond if the unit owner requires suffers Loss of Rental Income following a loss, provided that the unit was tenanted and the loss renders the unit uninhabitable.

Rental Income loss

If a tenant breaks their lease and leaves the unit, the Strata policy will not respond for any financial loss of the rental income.

Tenant Injury

The landlord may be liable for damages if their tenant is injured in the owner’s unit.

Landlords Contents

Coverage for Landlord’s contents that are in the unit for use by the tenant (e.g. White Goods) are available through a Landlords policy, as a Strata policy will not respond for this coverage.

Strata Insurance Team

phil hughes

Account Executive
tyson jeffrey

Account Manager
daniel woodthorpe

Account Manager

Strata Insurance Blogs

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Strata Insurance Testimonials

Strata Alliance

I have dealt with KBI on a number of occasions and found their service to be impeccable. Their hands on approach and willingness to assist with any queries are what make them stand out from the rest. They are always happy to help and you can call or email them any time of the day and know that they will get back to you within a timely manner. The actual report is provided in such user friendly format assisting our clients in making an informed decision. I highly recommend them to anyone. Well done KBI keep up the great work.

Elizna Pelser
Certified Strata Community Manager

MAC Strata Management

"I have found the KBI team great to deal with as their process is simple and the level of service is excellent. Having a single point of contact to access all insurers saves me time and makes my job that much easier, as well as ensuring we get good value for our clients. I would definitely recommend using their services."

Tom Rawle
Strata Assets Manager

Lansbury & Associates

"Being a Property/Strata Manager in a demanding boutique real estate agency my time management is enormously important. Phil and the KBI team offer a solution to outsource the insurance policies for my clients, providing multiple options which allow the Strata Companies to make an informed decision for the best policies for their property. KBI also assist with the processing of claims, recommend trades and services for those unexpected after hours emergencies and at the renewal of existing policies again send through quotes so my clients are offered the best policies in this very competitive market. Their process saves me time and allows me to focus on my clients in other areas. For quality and friendly customer service KBI is a company highly recommended by myself and the agency in which I am employed."

Lisa Myles-Taylor
Property/Strata Manager

JLL

"I have been working with the Property Team at KBI for some time now and I wouldn’t hesitate to say that they make my job as a property manager easier. They have always managed to improve the cost and/or the cover on all the policies I have sent through. Their level of service is fantastic, especially the claims process and enquiry response time. I’d recommend Phil Hughes and the team at KBI to anybody who works in the commercial property industry if they have any insurance requirements."

Tami Bennett
Property & Strata Manager

Strata Insurers

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