By Evelyn 
There are responsibilities owners should be conscious of when they own strata property, which can be easy to forget, particularly in relation to insurance. There are other common property aspects in a strata plan such as private lots, shared buildings, gardens, lifts, driveways, etc. that may require various types of protection. Knowing the terms of the Policy can benefit the owner get prepared for strata insurance quote and avoid unnecessary expenses associated with damage, accidents or significant repairs.
Typically, strata insurance covers the property instead of the homeowner’s belongings. This will vary from state to state and may involve reinstating and replacing buildings as well as insurance (public liability and other required insurance). For instance, strata plans in NSW are required to be insured in terms of building and public liability insurance. Unless you have a proper valuation, you could be creating more problems that you may not have anticipated with debris removal and other costs.
One of the main pitfalls is thinking that the strata policy extends into one’s space within a lot. Generally, the responsibility for personal items like furniture, appliances, and other contents falls to the owner or tenant who stays in the rented home. Owners should therefore assess their own provisions and other personal insurance coverage requirements and not just the building policy.
A claim may also be based on a boundary that is between common property and a private lot. Fixtures, improvements, shared services and building and structure components can be distinct, depending on the wording and intent of the property plan and state legislation/policy. These boundaries are better clarified through reading the policy schedule and relevant strata documents before it’s a problem.
Insurance should be reviewed whenever the property changes and not just at the time of renewal. Various improvement projects, such as renovations, new construction, shifting construction expenses, mixed-use properties and evolving safety requirements, can have an impact on the amount of risk.
You need to be careful when comparing policies by considering the following:
- Current replacement value and valuation date in respect of the building.
- Public liability limits, exclusions, excesses and important conditions.
- Additional cover for risks including machinery failure, common property contents and other scheme risk items.
Just because the strata property is the cheapest premium, it does not automatically mean that it is the best strata premium. A lower price can mean greater excesses, smaller cover, and/or exclusions around incidents that may be of significance. Owners must keep in mind the actual coverage, not just the premiums, when making a comparison.
In conclusion, articulating all of which areas this insurance protects and what the owners are required to protect themselves is the first step to good strata insurance. The legal requirements vary from state to state and territory in Australia. Owners are advised to refer to the legal requirements applicable to their specific scheme and to carefully read the policy wording. The strata community can be equipped to defend against unplanned property damage and unexpected costs should accurate valuations be done.
