Body corporate insurance protects common property, body corporate assets and, in most schemes, the buildings containing lots. It also provides public risk cover.
This factsheet explains what body corporate insurance covers in Queensland, who pays the premium and excess, and what separate cover owners and landlords may need.
What does body corporate insurance cover in Queensland?
The Body Corporate and Community Management Act 1997 and the regulation module applying to the scheme provide the legal framework. Insurance arrangements also depend on whether the scheme is registered under a building format plan or standard format plan.
A body corporate must insure:
- common property
- body corporate assets
- public risk
- in most cases, every building containing a lot.
Common property and body corporate assets must be insured for full replacement value. The policy must cover damage, associated reinstatement or replacement costs such as professional fees and debris removal, and returning the property to new condition.
Building insurance must cover damage from earthquake, explosion, fire, lightning, storm, water, glass breakage, impact, malicious acts and riots.
Public risk insurance covers amounts the body corporate may be liable to pay for death, illness, injury or property damage connected with relevant common property and assets. It must provide at least $10 million of cover for a single event and for the policy period.
The policy responds only when the damage falls within its insured events, conditions and exclusions. Check the current policy wording rather than assuming every type of damage is covered.
What does body corporate insurance cover under a building format plan?
Building format plans are commonly used for multi-storey residential buildings, although some townhouse schemes also use them.
For a building format plan, the body corporate must insure each building containing an owner’s lot for its full replacement value.
If the body corporate must insure one or more buildings, it must obtain an independent valuation for the full replacement cost at least every 5 years.
The valuation helps the body corporate set an appropriate sum insured. Owners share the valuation cost according to their share of the building insurance premium.
Who insures a building under a standard format plan?
Standard format plans are commonly used for low-rise developments, such as townhouse complexes where each lot has a backyard or courtyard. This is an example rather than a test of the scheme’s plan type.
The body corporate must insure each building that shares a common wall with another building for full replacement value. The owner is responsible for insuring a freestanding building on their lot.
A body corporate can establish a voluntary insurance scheme for buildings without common walls. An owner of a freestanding building does not have to participate, but an owner who joins must provide the replacement value and pay their part of the premium.
If you are uncertain about your plan type, review the scheme’s registered survey plan before arranging cover.
What is included in body corporate building insurance inside your lot?
For insurance purposes, a building includes improvements and fixtures added to it. This may include fixed bathroom fittings, sinks, cabinetry, built-in cupboards, windows, doors and fixed tiling.
Fixed kitchen appliances may also fall within the building definition where they are appropriately wired or plumbed in. Ducted air-conditioning serving the whole building is different from an air-conditioning unit serving only one lot.
The building definition excludes:
- temporary wall, floor and ceiling coverings, including carpets
- fixtures a tenant can remove at the end of a tenancy
- mobile or fixed air-conditioning units serving a particular lot
- curtains, blinds and other internal window coverings
- mobile dishwashers, clothes dryers and other electrical or gas appliances that are not wired or plumbed in.
Whether an item is covered also depends on the plan type, the cause of damage and the current policy terms. Do not treat every internal fixture or appliance as automatically insured.
Insurance and maintenance responsibilities are separate issues. Our body corporate maintenance factsheet provides further guidance on who may be responsible for maintaining an item.
Who pays the insurance premium and excess?
Every owner contributes to body corporate expenses through levies, including the insurance premiums collected through the administrative fund.
How the premium is shared depends on the cover and survey plan:
- building format plan premiums are based on interest schedule lot entitlements
- standard format plan premiums for buildings with common walls relate to the cost of reinstating the buildings on each lot
- common property and body corporate asset insurance is based on interest schedule lot entitlements
- public risk insurance is based on contribution schedule lot entitlements.
Responsibility for an excess depends on the circumstances. If an insured event affects only one lot, the owner should generally pay unless the body corporate decides this would be unreasonable. If it affects multiple lots or common property, the body corporate should generally pay unless it decides another allocation is reasonable.
For example, the body corporate may pay where its failure to maintain common property caused the damage. An owner may pay where water escaped from an item within their maintenance responsibility. The facts, maintenance obligations and policy terms must all be considered.
Read more about who pays the body corporate insurance excess and managing water leaks in a strata property.
What insurance does a lot owner or landlord need?
Owners should consider contents or landlords insurance for property excluded from the body corporate policy. Depending on the policy, this could include carpets, curtains, light fittings, appliances and lot-specific air-conditioning.
Owners in a standard format plan may also need building insurance for a freestanding building on their lot.
If you rent out your lot, landlords insurance may offer cover for accidental or malicious damage and loss of rent. Cover varies between insurers, so review the inclusions, limits and exclusions carefully.
Tenants should arrange cover for their own furniture and personal belongings.
How can you check your body corporate insurance and make a claim?
At each annual general meeting, the body corporate must give owners information about its insurance policies and completed valuations. Valuation details must include the valuation date and the buildings’ full replacement value.
Before making a claim, check the current certificate of currency and policy wording. Commonly requested information includes:
- the date and cause of the damage
- photographs
- invoices for work completed
- repair quotations.
Each claim is different, so discuss it with StrataCare’s insurance team before lodgement.
Understanding your plan type, policy wording and maintenance responsibilities will help you identify which insurance should respond.
For help with an insurance enquiry or claim, contact our team at reception@stratacare.com.au.
