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What is Strata Insurance?
The concept of strata insurance is approximately 50 years old, but the idea is popular worldwide. Strata cover is compulsory in all Australian states and territories. Owners of strata-titled property do not have the option to refuse this cover.
Essentially, if you own an apartment or a unit and share common areas with others you need strata insurance. This will pay for damages to shared areas, as well as the building.
Who Needs This Insurance?
While your insurance professional can address your unique circumstances, it is often a wise decision for renters or lessees to get insurance cover for property and equipment. If you're unsure about your specific circumstances, contact our expert team today.
Here's An Example:
Hope leases a storefront for her day spa. While she does not own the building, she has a large amount of money invested in all of the equipment needed to serve her customers, as well as the items that make her spa stand out from the competition.Suppose a fire destroys the building. Most, if not all, of Hope’s equipment and decorative items will also be lost. If she does not have the necessary cover, Hope will experience a tremendous financial loss. The loss could be significant enough to force her to close her business permanently.However, if Hope has insurance that covers the property and equipment, she will be able to replace the things needed to operate her business.
All persons who belong to an owners’ corporation in a flat, duplex, townhouse, or, a unit need strata insurance.
Strata owners share liability for unforeseen events and damages, so the insurance is required.
Important Facts
- A report from the Insurance Council of Australia revealed that strata insurance premiums are approximately 1/3 of premiums for equivalent cover on a stand-alone house.
- There is a consistent rise in the number of apartments in Australia.
- Strata insurance premiums will vary based in part on the location and perceived risks.
Factors That Help Determine the Premium Cost
- Age and condition of the property
- Replacement costs for the property
- Claims history of the strata property
- The risk profile of the strata property
- Level of excess selected
- Costs of the common property
What Can Strata Insurance Cover?
While individual policies can vary, strata insurance can cover the building, contents, and shared common spaces that belong to the strata owner’s corporation.
Benefits of Compulsory Strata Cover
Strata insurance will payout for the following:
TYPE OF COVER
- Public Liability
- Building and Common Contents
POTENTIAL BENEFITS
- Injuries sustained by an individual or individuals
- The structure as well as the content located in an area that the owners’ corporation holds a responsibility. This includes equipment, carpeting, fixtures, and furniture.
Potential Benefits of Optional Add-ons to Strata Insurance
Depending on the policy, the following can be part of the optional coverage in a strata insurance policy.
TYPE OF COVER
- Mechanical and Electrical Breakdowns
- Office Bearer's Liability
- Fidelity Guarantee
- Personal Accident for Voluntary Workers
POTENTIAL BENEFITS
- Cover for necessary repairs if common mechanical or electrical equipment break down as a result of the loss.
- Covers office bearers from legal action taken in relation to wrongdoing on the part of an office-bearer.
- Covers losses caused by misappropriation of the owner’s corporation funds.
- Covers losses incurred by a person volunteering to work on behalf of the owner’s corporation.
A List of Typical Exclusions From This Policy
- Property features like fencing
- Asbestos or asbestos derivatives
- Personal contents within apartments
- Erosion or earth shifting
Case Study
Strata owners experienced a loss due to a malfunction and fire of the building elevator mechanism. Because of strata insurance, repairs did not require any out of pocket money from the strata owners. Please note this information is for educational purposes only and does not constitute complete advice and will not replace the guidance of a trained professional.
Safe Work Australia, Key Work Health Safety Statistics 2014
"Penalties awarded against companies and its directors or officers for work health safety breaches have increased by 43% to $22.3 million in one year. Penalties now average $62,000 per company."
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Did You Know?
Many businesses think it won't happen to them, but statistics show otherwise. In fact:
(Chubb 2016 Private Company Risk Survey)
The likelihood of a claim that could be covered by a Management Liability policy has tripled in the last five years, with 50% of notifications resulting in a claim.
Chubb 2016 Private Company Risk Survey
The most common claims are for employment practices like bullying, harassment and wrongful dismissal.
Chub, 2016 Private Company Risk Survey
Major claims by amount relate to crime - including employee fraud.
Who Needs This Insurance?
All persons who belong to an owners’ corporation in a flat, duplex, townhouse, or, a unit need strata insurance.
Strata owners share liability for unforeseen events and damages, so the insurance is required.
Important Facts
- A report from the Insurance Council of Australia revealed that strata insurance premiums are approximately 1/3 of premiums for equivalent cover on a stand-alone house.
- There is a consistent rise in the number of apartments in Australia.
- Strata insurance premiums will vary based in part on the location and perceived risks.
Factors That Help Determine the Premium Cost
- Age and condition of the property
- Replacement costs for the property
- Claims history of the strata property
- The risk profile of the strata property
- Level of excess selected
- Costs of the common property
What Can Strata Insurance Cover?
While individual policies can vary, strata insurance can cover the building, contents, and shared common spaces that belong to the strata owner’s corporation.
Benefits of Compulsory Strata Cover
Strata insurance will payout for the following:
TYPE OF COVER
- Public Liability
- Building and Common Contents
POTENTIAL BENEFITS
- Injuries sustained by an individual or individuals
- The structure as well as the content located in an area that the owners’ corporation holds a responsibility. This includes equipment, carpeting, fixtures, and furniture.
Potential Benefits of Optional Add-ons to Strata Insurance
Depending on the policy, the following can be part of the optional coverage in a strata insurance policy.
TYPE OF COVER
- Mechanical and Electrical Breakdowns
- Office Bearer's Liability
- Fidelity Guarantee
- Personal Accident for Voluntary Workers
POTENTIAL BENEFITS
- Cover for necessary repairs if common mechanical or electrical equipment break down as a result of the loss.
- Covers office bearers from legal action taken in relation to wrongdoing on the part of an office-bearer.
- Covers losses caused by misappropriation of the owner’s corporation funds.
- Covers losses incurred by a person volunteering to work on behalf of the owner’s corporation.
A List of Typical Exclusions From This Policy
- Property features like fencing
- Asbestos or asbestos derivatives
- Personal contents within apartments
- Erosion or earth shifting
Case Study
Strata owners experienced a loss due to a malfunction and fire of the building elevator mechanism. Because of strata insurance, repairs did not require any out of pocket money from the strata owners. Please note this information is for educational purposes only and does not constitute complete advice and will not replace the guidance of a trained professional.
