Strata insurance explained
Strata insurance protects the Owners Corporation against a range of financial risks and is one of the most important responsibilities of every strata scheme. In NSW, most Owners Corporations are required to insure the building and common property in accordance with the requirements of the Strata Schemes Management Act.
A typical strata insurance program may include:
- Building and common property insurance.
- Public liability insurance.
- Office bearers’ and committee liability insurance.
- Fidelity guarantee cover.
- Machinery breakdown cover where appropriate.
- Voluntary workers insurance.
- Catastrophe and disaster response benefits where available.
Not all insurance policies are the same. Coverage, exclusions, excesses, limits, optional benefits and policy wording can vary considerably between insurers. The lowest premium does not always provide the most appropriate level of protection, and long-established insurers with proven claims experience may offer policy features that provide greater certainty when significant claims arise.
Individual lot owners should also understand that the Owners Corporation’s insurance does not replace the need for their own contents, landlord or personal liability insurance where appropriate.
At Strata Real Estate Services, we work with specialist strata insurance brokers to assist committees in understanding available insurance options, coordinating annual renewals, facilitating valuations where appropriate and supporting the management of claims. Our objective is to help committees make informed decisions while ensuring the Owners Corporation maintains appropriate protection for its building and common property.
For further general information about strata insurance, reputable resources are available from specialist providers such as Sage Insurance Group, Honan’s Insurance Group, SUU and CHU, together with independent insurance advisers.
Committee members and owners should review the Strata Management Agency Agreement to understand any remuneration, commissions, fees or other benefits the strata manager may receive in connection with arranging, renewing or administering the Owners Corporation’s insurance policies.
The information above is provided as general information only and should not be considered financial, insurance or legal advice. Owners Corporations and individual owners should obtain independent professional advice appropriate to their circumstances.