There are many misconceptions about what body corporate insurance is, what it covers and how it works. Understanding the usual cover can help you identify what your body corporate manages and what you may need to arrange separately.
What are the most common body corporate insurance myths?
Common misunderstandings include the idea that body corporate insurance is optional, that it covers everything inside an individual lot, or that owners can choose any insurance amount.
The answer depends on the scheme’s survey plan, the building boundaries and the policy wording. Research your body corporate insurance carefully, and check the current policy and valuation.
Is body corporate insurance compulsory in Queensland?
Body corporate insurance is compulsory in Queensland. The Body Corporate and Community Management Act 1997 and the applicable regulation module support arrangements requiring a body corporate to insure common property, body corporate assets, public risk and, in most cases, every building containing a lot.
The body corporate must insure common property and body corporate assets for their full replacement value. Public risk insurance must also cover the amounts the body corporate could be liable to pay for death, illness, injury and property damage.
The policy covers the property and risks for which the body corporate is responsible. Items owned by an individual lot owner may fall outside that cover.
What does body corporate insurance cover?
The type of building insurance required depends on whether the scheme is registered under a building format plan or a standard format plan.
For a building format plan, the body corporate must generally insure each building containing an owner’s lot for its full replacement value. For a standard format plan, the body corporate must insure each building that shares a wall with another building. A free-standing building on a standard format plan is generally the lot owner’s responsibility to insure.
The body corporate must also insure common property and body corporate assets. This can include assets such as gym equipment or pool furniture where it is practical to have public risk insurance for them.
Building insurance must cover damage and the additional costs of reinstating or replacing the insured buildings, such as professional fees and removing debris. The property must be returned to new condition under the policy.
The boundary between body corporate property and an owner’s property can depend on the scheme’s plan, the building definition and the policy wording. Fixed improvements and fixtures may be treated differently from temporary coverings, removable items and certain appliances. Check your policy rather than relying on a general fixture list.
For more background, read our body corporate insurance factsheet.
Does body corporate insurance cover my lot’s contents?
Body corporate insurance does not generally replace insurance for the contents of your individual lot. The building insurance guidance distinguishes the insured building and fixtures from items such as carpets, curtains, internal window coverings and certain removable appliances.
Review your own insurance needs for personal belongings and other items that are not part of the insured building. An item’s location inside your lot does not, by itself, confirm whether it is covered or excluded. The policy wording and the scheme’s building boundaries matter.
Can the body corporate choose a lower insurance amount?
The body corporate must insure common property and body corporate assets for their full replacement value. Where the body corporate must insure one or more buildings, those buildings must be valued for their full replacement cost. An independent valuation must be completed at least every 5 years.
The body corporate should use appropriate valuation information and check that the policy reflects the required replacement and reinstatement costs.
Owners must also tell the body corporate about improvements or changes that could affect the insurance premium, including improvements to a lot or common property for the benefit of a lot. This should be done as soon as possible after the improvements are made.
Do landlords and volunteer workers need separate insurance?
Landlord insurance is separate from body corporate insurance. If you rent out your lot, review your own insurance arrangements and check what the relevant policy does and does not cover. The body corporate policy should not be treated as a replacement for insurance arranged by an owner.
Volunteer worker cover also needs to be checked in the current policy. The available guidance does not confirm the benefits, exclusions or compensation arrangements under a particular policy. Check the current policy wording before a volunteer carries out work on behalf of the body corporate.
How can owners check their body corporate insurance cover?
Start by requesting the current insurance policy, schedule and valuation information from your body corporate or body corporate manager. At each annual general meeting, the body corporate must give owners information about its insurance policies and any valuations completed, including the valuation date and full replacement value of the buildings.
You can also check:
- whether your scheme is registered under a building format or standard format plan
- which buildings and common property the body corporate insures
- what the policy says about fixtures, improvements and contents
- whether your lot’s use or improvements have been disclosed
- who may be responsible for an excess when a claim affects your lot or common property.
Our guides to body corporate insurance and who pays the insurance excess provide further practical information.
Body corporate insurance generally protects the required buildings, common property and body corporate assets, while owners should check their own separate insurance needs. If you need help understanding your body corporate insurance information, contact our team at reception@stratacare.com.au.
