Question: For a Class B unit in the ACT, do I need to insure the structure of the building in addition to landlord’s insurance.
I own a Class B unit in the ACT and wish to clarify if I need to insure the structure of the building itself in addition to landlord’s insurance.
There are no common walls to adjacent units, but I am responsible for all repairs to the unit including cracks in the brick work due to subsidence. Despite this the Owners Corporation has an extensive insurance policy, so I am a little confused. Can you clarify?
Answer: If the appropriate steps have been taken in accordance with the legislation to exempt the owners corporation from the requirement to take out insurance, the responsibility to insure the building falls on the lot owner
The Unit Titles (Management) Act 2011 states that “an owners corporation for a units plan containing only class B units may, by unanimous resolution, exempt itself from the requirement to take out building insurance for any risk stated in the exemption resolution for all buildings (or parts of buildings) that are on the class B units.”
In essence, if the appropriate steps have been taken in accordance with the legislation to exempt the owners corporation from the requirement to take out insurance, the responsibility to insure the building falls on the lot owner.
In relation to building cracks that have appeared due to subsidence, I think it is important to understand the difference between “responsibility to insure” and “responsibility to maintain” property. It is my view this is where the misunderstanding may be.
If the owners corporation has not passed a resolution to exempt itself from the requirement to take out insurance, then the owners corporation has “responsibility to insure” the building.
For events that fall outside of an insurance claim, a lot owner has “responsibility to maintain” property that forms part of their lot. Damage that is caused by subsidence or earth movement is a common exclusion and I am not aware of a strata or home policy that provides cover for these events.
If the owners corporation has a requirement to insure the building and they have done so, they have met their requirements under the Act. If the insurer has declined a claim, it falls on the owner of the property to repair that property.
Tyrone Shandiman Strata Insurance Solutions E: tshandiman@iaa.net.au P: 07 3899 5129
This information is of a general nature only and neither represents nor is intended to be personal advice on any particular matter. Shandit Pty Ltd T/as Strata Insurance Solutions strongly suggests that no person should act specifically on the basis of the information in this document, but should obtain appropriate professional advice based on their own personal circumstances. Shandit Pty Ltd T/As Strata Insurance Solutions is a Corporate Authorised Representative (No. 404246) of Insurance Advisernet Australia AFSL No 240549, ABN 15 003 886 687.