Body corporate insurance responsibilities can be difficult to understand, particularly when you are working out what the scheme covers and what you need to insure yourself. This guide explains the main types of cover, how responsibility differs between plan types, and what owners, landlords and tenants should check.
What does body corporate insurance cover in Queensland?
In Queensland, the Body Corporate and Community Management Act and the relevant regulation module set out the body corporate’s insurance responsibilities.
A body corporate must have insurance for:
- common property
- body corporate assets
- public risk
- in most cases, each building containing a lot.
The body corporate must insure common property and body corporate assets for their full replacement value. The policy must cover damage and the additional costs of reinstating or replacing insured buildings, including professional fees and debris removal. It must also provide for the property to be restored to its condition when new.
Public risk insurance applies to common property and body corporate assets where it is practical to have that insurance. It covers amounts the body corporate could be liable to pay for third-party death, illness or injury, and damage to property. The sum insured must be at least $10 million for a single event and for the period covered by the policy.
The cover available depends on the policy wording, exclusions and schedule. Check those documents before assuming that a particular item or type of damage is insured.
Who insures a building under a building format or standard format plan?
Your scheme’s registered survey plan affects who must insure each building. The two common types are building format plans and standard format plans. You can contact Titles Queensland for a copy of the registered survey plan.
Building format plan
A building format plan is commonly used for multi-storey residential buildings, although some townhouse schemes are also registered this way. The body corporate must insure each building that contains an owner’s lot for its full replacement value.
Standard format plan
A standard format plan is commonly used for low-rise developments, such as a townhouse complex where each lot has a building and a backyard or courtyard.
The body corporate must insure each building that shares a wall with another building. These are known as common-wall buildings.
An owner is responsible for insuring a free-standing building where the scheme is registered under a standard format plan. The body corporate can establish a voluntary insurance scheme for free-standing buildings, but an owner does not have to participate.
If the body corporate arranges building insurance, owners contribute towards the premium through their body corporate levies. For a building format plan, the building insurance share is based on interest schedule lot entitlements.
The amount each owner pays can also depend on the plan type, the insurance arrangements approved for the scheme and how the premium is calculated. Check your contribution notices and scheme records if you are unsure.
What inside a unit is covered by body corporate insurance?
Body corporate building insurance includes the building, improvements and fixtures added to it. It does not include every item inside a lot. The statutory building definition excludes temporary wall, floor and ceiling coverings, carpets, tenant-removable fixtures, lot-specific air conditioners, curtains and blinds, and mobile appliances that are not wired or plumbed in.
Depending on the building classification and policy wording, building insurance may include:
- internal walls, ceilings, cornices and skirting boards
- fixed cupboards and bench tops
- fixed tiling
- windows and doors
- sinks, toilets, baths and shower screens
- cooktops and ovens
- ducted air conditioning.
Mobile or fixed air-conditioning units that service only one lot may be the lot owner’s responsibility. Loose appliances such as dishwashers, clothes dryers and other electrical or gas appliances that are not wired or plumbed in may also fall outside the insured building.
These examples are not a complete list of cover. A fixed item may be treated differently from a removable item, and the policy schedule may contain additional conditions. If you are unsure whether an improvement or fixture is insured, ask the body corporate manager or insurer before arranging repairs or making a claim.
The body corporate must obtain an independent valuation of buildings it is required to insure, based on full replacement cost, at least every 5 years. Each owner contributes towards the cost of the valuation through the administrative fund.
If you make an improvement to your lot, common property for your lot’s benefit or an exclusive-use area, tell the body corporate as soon as possible if it could affect the insurance premium. If you do not provide the details, you may have to pay repair or replacement costs that are not covered by insurance.
For more information about the division between body corporate and lot owner responsibilities, see our body corporate maintenance factsheet.
What insurance does a lot owner, landlord or tenant need?
Owners should arrange insurance for belongings and items that are not covered by body corporate insurance. Contents insurance may be relevant for carpets, light fittings, curtains, ceiling fans, furniture, appliances, valuables and personal equipment.
If you own and occupy your lot, consider the items inside it that would not be replaced by the body corporate policy. Examples may include:
- carpets and other floor coverings
- light fittings and ceiling fans
- curtains and blinds
- mobile or fixed air conditioners
- furniture and household appliances
- jewellery and other valuables.
This is a practical checklist, not a complete list of what your policy should cover. Speak with an insurer or broker about the risks and items relevant to you.
If you rent out your lot, landlord insurance may provide cover for owner-owned fixtures, accidental or malicious damage, and loss of rent. These are possible policy features rather than guaranteed inclusions, so check the terms before choosing a policy.
A landlord should also confirm how the body corporate policy and landlord policy work together. For example, an item may be part of the lot, an owner improvement or a removable appliance. The treatment can depend on the plan and policy wording.
Tenants should arrange contents insurance for items they own inside the lot. This may include furniture, televisions, computers, clothing, jewellery and sporting equipment. The tenant’s policy will determine what is covered and any applicable limits or exclusions.
Owners and tenants should not assume that the body corporate’s building insurance covers their personal belongings. If you are unsure what cover you need, speak with your insurer, broker or body corporate manager. You can also read our body corporate insurance factsheet.
Who pays the body corporate insurance excess?
An excess is the amount paid by the body corporate or an owner towards an insurance claim. The body corporate can take out a policy with an excess, but the excess must not create an unreasonable burden on individual lot owners.
The BCCM Act and the regulation module determine how responsibility for the excess is allocated. When an insured event affects only one lot, the lot owner should generally pay the excess unless the body corporate decides that this would be unreasonable.
The outcome can depend on the source of the damage and who was responsible for maintaining the relevant area. For example, the owner may normally pay where water escapes from their lot. It may be reasonable for the body corporate to pay where damage results from the body corporate failing to maintain common property.
Different arrangements can apply when an event affects 2 or more lots, or one or more lots and common property. In those circumstances, the body corporate should generally pay unless it decides it is reasonable for one or more affected owners to pay all or part of the excess.
For more detail, see who pays the body corporate insurance excess. Keep records of the damage, report the issue promptly and check the scheme’s maintenance responsibilities before deciding who should pay.
What insurance and valuation information should owners receive?
At each annual general meeting, the body corporate must give owners information about its insurance policies and any valuations completed. The valuation information must include the valuation date and the full replacement value of the buildings.
Owners can use this information to check:
- what buildings and assets the body corporate is insuring
- the date of the latest valuation
- the full replacement value
- whether the scheme’s insurance arrangements match its registered plan
- whether improvements or changes need to be disclosed.
The body corporate collects insurance premiums through owner contributions to the administrative fund. Annual levies are decided at the annual general meeting, including the amount each lot must pay and the dates instalments are due.
Keep a copy of the policy schedule, valuation information and any relevant correspondence about improvements or damage. These documents can help clarify whether a claim relates to common property, the building, a lot owner’s contents or a landlord’s responsibility.
Body corporate insurance generally covers common property, body corporate assets and insured buildings, but the cover you need personally depends on your plan, your belongings and your policy wording. For help with body corporate insurance questions, contact StrataCare at reception@stratacare.com.au.
