Insurance for Bodies Corporate can be quite complicated, and many owners can be unclear about what is actually covered by the body corporate and what must be covered by individual owners.
The following is a brief outline and further information
So, what does strata or body corporate insurance cover in QLD?
The Building
Under the Body Corporate and Community Management Act, the body corporate is responsible for insuring common property and body corporate assets, as well as buildings in which lots are located.
This includes improvements and fixtures (excluding carpet) but does not include:
- Temporary wall, floor and ceiling covers
- Fixtures removable by a lessee or tenant at the end of a lease or tenancy
- Mobile or fixed air-conditioning units servicing a specific lot
- Curtains, blinds or other internal window coverings
- dishwashers, clothes dryers or other electrical or gas appliances not wired or plumbed in
Please note that not all Insurers automatically include cover for Floating Floors. Owners should satisfy themselves that the current Body Corporate Policy includes Floating Floors. In the event that Floating Floors are not covered it will be the owner’s responsibility to ensure that they are included in the owner’s Contents Policy.
Building Format Plan
If registered as a Building Format Plan (for example, a multi-storey block of residential units), the body corporate must hold insurance for the full replacement value of each building which contains a lot.
Standard Format Plan
Schemes are usually registered under a standard format plan of subdivision if they are low-rise developments. An example is a townhouse complex where there is a building on each lot with a backyard or courtyard.
The body corporate must insure (for the full replacement value) each building that shares a wall with another building (known as a common wall).
The lot owner is responsible for insuring their own building if it is:
- free standing—does not share a common wall with another building
and
- registered under a standard format plan
and where the Body Corporate has not been authorised by the owners to effect a building Policy on their behalf. In the event the Body Corporate arranges the Building Insurance, all owners will be levied for their contribution of the insurance premium in accordance with their Interest Entitlement with such contributions payable on the dates adopted at the Annual General Meeting.
In your lot?
In your lot, the things which are generally covered by the body corporate building insurance include:
- Internal walls, ceilings, cornices and skirting boards
- Toilets, baths, basins, shower screens
- Sinks
- Cook tops and ovens
- Ducted air conditioners (but not mobile or fixed air conditioners which service a particular lot)
- Fixed bench tops
- Built in cupboards
- Windows and doors
- Fixed tiling
Damage to the Building
Valuations must be obtained at least every five years and must be for full replacement value of building.
Covered for:
- Earthquake, explosion, fire, lightning, storm, tempest and water damage
- Glass breakage
- Damage by impact, malicious act, riot
Compulsory Insurance
Applies to Common Property and Assets. It must cover damage and costs associated with the reinstatement or replacement of insured buildings (including the cost of taking away debris and the fees for architects and other professional advisors). The policy must provide for reinstatement of property to its condition when new.
Public Liability
Compulsory Insurance also applies to public risk (public liability) insurance over common property and assets for which it is practical to have public risk insurance. Public risk insurance must provide for compensation for third party bodily injury and property damage. The sum insured for such insurance must be no less than $10million. The current recommended sum insured is $20million.
Payment of Excess
The BCCM Act and the regulation module set out the basis for allocating liability for payment of excess under a body corporate insurance policy
Where one event covered by an insurance policy affects only one lot, the legislation says that the lot owner is liable to pay the excess, unless the Body Corporate decides that this is unreasonable.
As an example, in an instance where a lot is damaged as a result of the common property not being properly maintained by the Body Corporate then it would be reasonable for the Body Corporate to attend to payment of the excess. Where a lot is damaged as a result of water leaking from another lot where the owner is responsible for the maintenance then in this instance the lot owner from where the water leak emanated would be responsible for payment of the excess.
What insurance do Owners need to have for their units?
Owners need to organise their own Contents cover and/or Landlords cover for items that are not covered by the Body Corporate’s policy. These include (but are not limited to) floor coverings (including carpets), light fittings, curtains, air conditioners and public liability for inside their units.
If your Scheme is registered under a Standard Format Plan you may need to also organise your own building cover for your unit. If you are not sure please contact our office.
Owners should speak to their Insurance Broker or Body Corporate Manager to determine exactly what coverage they require.
Owner Occupiers
As a unit owner, you are responsible for all items from the interior paint inwards (minus fixtures and improvements as listed above). This means you should insure:
- Carpets
- Light fittings
- Mobile/fixed air conditioners
- Curtains and blinds
- Ceiling fans
- Furniture
- Household appliances e.g. dishwashers, microwaves, washing machines
- Valuables and personal equipment
Landlord’s insurance
If you rent out your lot it is vital to take out a form of landlord’s insurance. This insurance will cover the items owners are responsible for which are not covered by the body corporate’s policy (such as carpets, light fittings, dishwashers, air conditioners). Your tenants, however, will be responsible for insuring their own furniture and personal belongings.
Landlord’s insurance will often include other covers such as accidental damage, malicious damage, and loss of rent.
Tenants
Your building structure, bath, sink and bench tops are covered by the body corporate. Your carpets, light fittings and dishwasher are covered by the landlord. So what are you responsible for?
It is highly encouraged that you take out contents insurance for the items you own within the unit.
This may include:
- Furniture
- TVs, computers, DVD players
- Clothes
- Jewellery
- Sports equipment
Getting insurance information
At its annual general meeting each year the body corporate must give owners information about its insurance policies and any valuations that have been done.
Details for the valuation must include the:
- date of the valuation
- full replacement value of the buildings
If you have questions or need assistance with body corporate insurance contact our office today!
