Top Strata Insurance Myths
Strata insurance, also referred to as body corporate insurance, provides essential coverage for Australian property owners. However, there are many misconceptions about what strata insurance covers and how it works, which often lead to confusion and sometimes costly mistakes.
We've unpacked the common myths about strata insurance, providing clarity to help you make informed decisions. Whether you're a strata manager, committee member or owner, understanding the facts ensures your building is properly protected and prepared for the unexpected.
Myth 1: Insurers everywhere want to provide your coverage
While many insurers provide strata insurance, not all are able to provide the coverage you need, so it is not uncommon for insurers to deny you coverage. Certain risks, such as buildings with existing defects or properties located in high-risk areas, such as flood zones, may fall outside the appetite of some insurers. These are known as "hard-to-place risks." For example, minor defects that don't affect a building's structural integrity might still be insurable, provided the strata committee is actively managing these issues. However, finding coverage for these situations often requires expertise and access to a broader pool of insurers, which is where an insurance broker can provide value.
Myth 2: Strata Insurance covers personal contents
A common misunderstanding among property owners and tenants is that strata insurance covers personal contents. However, strata insurance primarily focuses on common property, which includes the building structure, shared areas, and common facilities, such as lifts, stairwells, and swimming pools. It also typically covers the exterior of the building and other features specified in the strata agreement. That said, strata insurance does not extend to individual belongings within your unit. For unit owners or occupants, personal contents insurance is essential to safeguard personal possessions like furniture, electronics, clothing, window dressings, and floating floorboards. Ultimately, strata insurance and personal contents insurance are complementary. Together, they ensure comprehensive protection, covering both shared property and personal belongings, giving you peace of mind.
Myth 3: Strata Insurance covers personal contents
In Australia, strata insurance is compulsory for all buildings registered under a strata scheme, such as apartment blocks, townhouses, and retail shops. This requirement ensures that shared spaces and common property are adequately protected in the event of damage or loss. The policy must cover the full replacement value of the building, including demolition and debris removal, aligning with the latest insurance valuation obtained by the strata committee. Additionally, it must meet current state legislation for specific coverage, such as public liability.
[Read: Navigating Strata Risks: Insurance Considerations for Body Corporates]
Myth 4: You can place Strata Insurance without a broker
Anyone can place strata insurance without a broker, that is not a myth. However, strata insurance is often complex, particularly as no two buildings are the same. This can make it tricky to navigate and challenging to know what questions to ask the insurer to secure the right coverage.
A specialist strata insurance broker can provide expertise and value that simplify the process and enhance outcomes, helping you make sense of strata insurance intricacies. With access to multiple insurers, including those that aren't available direct to consumers, brokers provide a broad range of policy options, often approaching 10 or more providers to ensure the best fit for your needs. Additionally, an insurance broker's industry knowledge allows them to negotiate competitive rates and terms, while their understanding of legal requirements and risk mitigation ensures informed decision-making and avoidance of pitfalls like underinsurance.
Acting in the client's best interest, brokers prioritise securing the most suitable and cost-effective coverage for your building. Further, when it comes time to make a claim, a broker will handle the paperwork, communicate with the insurer on your behalf, and ensure that you receive the best outcome.
Ensuring the right coverage
Understanding the ins and outs of strata insurance is crucial for property owners, managers, and committees alike. Whether you're navigating the complexities of insurance providers, managing personal contents, or complying with legal requirements, expert guidance - such as that from a qualified insurance broker - can help you avoid costly mistakes and ensure your property is adequately protected for the future. By staying informed and proactive, you can confidently secure the right coverage and be better prepared for whatever comes your way.
Terminology
It's important to note that Australian states define their group of strata representatives differently. This is the terminology used according to state:
- ACT: Executive Committee
- NSW / VIC: Owners Corporations
- QLD / NT / TAS: Body Corporates
- SA: Strata Corporations
- WA: Strata Companies
How Coverforce can help
With over 20 years experience specialising in strata insurance, Coverforce is committed to helping owners, body corporates and strata managers secure the best value coverage. We work closely with leading underwriters to deliver policies that meet the unique needs of your building while delivering exceptional value.
For expert advice and insurance solutions that fit your needs and budget, contact your local Coverforce office and speak with a specialist strata broker today.
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