This article is about insurance requirements for NSW owners corporation and strata.
Table of Contents:
- QUESTION: Can the Strata Plan secure more than one broker’s quotes for our Strata Plan’s annual Insurance Coverage? Our broker advised us that we can only go through one broker. Is this true or false?
- QUESTION: In my experience, quantity surveyors overvalue the building insurance valuation and engaging a valuer experienced in building insurance valuations is best. Is this correct?
- QUESTION: Do we need to inform our insurer about installing ceiling insulation batts in our roof cavity where there are many cables?
- QUESTION: If there is no owners corporation in a NSW Duplex and both lot owners only pay the annual strata insurance premium, are both lot owners legally and fully covered by the policy?
- QUESTION: The Risk associated with Flooding, earthquake etc are rated as extremely low and, from a statistics viewpoint, unlikely to happen. Does the insurance industry rate our area as per a group of postcodes?
- QUESTION: Does strata insurance cover public liability for parking bollards installed on non-common areas of a NSW owners corporation, ie they are on strata title. Also, does it cover public liability for private skip bins and other gear that is kept on strata title parking lots?
- QUESTION: A motorcycle was stolen from common property. Would this be covered under the Strata’s insurance as it was parked on common property?
- QUESTION: We run a SEPP 55, over 55’s independent living strata titled retirement village with 104 properties. Do we need special property insurance because we are a retirement village?
- QUESTION: Does Insurance cover any structure that is not compliant with the BCA or any damage from fire that emanates from that structure?
Question: Can the Strata Plan secure more than one broker’s quotes for our Strata Plan’s annual Insurance Coverage? Our broker advised us that we can only go through one broker. Is this true or false?
Answer: That’s not correct.
That’s not correct. So we obviously, being a broker ourselves, we compete against other brokers for the insurance. The holding insurer that holds the insurance policy will reserve specifically to the broker that insures the policy through them. And there are some insurers that will reserve to one broker at a time as well. But there’s absolutely no reason why the Owners Corporation cannot seek the services from two brokers, and tenders from two brokers, for the insurance renewal.
Tyrone Shandiman
Strata Insurance Solutions
E: [email protected]
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.
This post appears in Strata News #496.
Question: In my experience, quantity surveyors overvalue the building insurance valuation and engaging a valuer experienced in building insurance valuations is best. Is this correct?
Answer: I would recommend using a quantity surveyor, and I know that there are a lot of valuers out there that are not qualified quantity surveyors.
Correct, I would recommend using a quantity surveyor, and I know that there are a lot of valuers out there that are not qualified quantity surveyors.
Australian Institute of Quantity Surveyors
You can go on the Australian Institute of Quantity Surveyors website and search whether the person that’s providing the valuation is actually a registered quantity surveyor. The valuers that we recommend to our clients use a cost per square metre guide and they use the Rawlinsons Guide. This is the industry respected guide.
Quantity surveyors will not insure you or recommend a sum to the very dollar. They will always allow a margin for error, should there be a total loss. This is because the consequences of under insurance versus over insurance is very obvious if there was to be a total loss claim.
Tyrone Shandiman
Strata Insurance Solutions
E: [email protected]
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.
This post appears in Strata News #494.
Question: Do we need to inform our insurer about installing ceiling insulation batts in our roof cavity where there are many cables?
Some owners in our strata building wish to install ceiling insulation batts in our roof cavity where there are many cables and electrical wiring.
Does a NSW owners corporation need to alert our building strata insurer about this proposed work? I am concerned that the installation of batts may increase fire risk in the ceiling cavity given the presence of all the cabling. Our building is 60 years old and has older wiring.
Answer: There’s no specific requirement that you must notify the insurer every time you do something to the building.
There’s no specific requirement that you must notify the insurer every time you do something to the building.
When it comes to your disclosure requirements:
- You must answer all questions the insurer asks you with regard to arranging insurance. I don’t believe that they will ask specifically about whether the batts are installed, or about batts that are installed.
- You must disclose all things relevant to the insurance decision to insure you. So what the committee really needs to do is if they become aware that the installation is non compliant (from a professional builder), they would need to disclose that to the insurer. But if you’re concerned but don’t have anything to support, that the installation wasn’t compliant, then there may not necessarily be a need to disclose that to the insurer because provided that the builders have put the batts in and they comply with the applicable, building regulations and codes, then there would be no need to then disclose the additional batts in the ceiling to the insurer.
Tyrone Shandiman
Strata Insurance Solutions
E: [email protected]
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.
This post appears in Strata News #492.
Question: If there is no owners corporation in a NSW Duplex and both lot owners only pay the annual strata insurance premium, are both lot owners legally and fully covered by the policy?
If there is no owners corporation in a NSW Duplex and both lot owners only pay the annual insurance premium, are both lot owners legally and fully covered by the so called ‘ STRATA’ policy?
The other lot owner in my duplex does not want an owners corporation and will not pay for a strata management company. They have a tenant renting the property.
The insurance company say they will not email me with confirmation that we are indeed fully and legally covered, but they will send a copy of the policy when the account has been paid.
Answer: If it’s a strata policy with an Australian insurer, generally their policy wordings will comply with the act
You have a requirement in NSW to insure for full rebuild value. The best way to ensure you comply with that requirement is to get an insurance rebuild valuation done by a quantity surveyor. The next requirement is to ensure that you have public liability for a minimum of 20 million in NSW.
Provided you’re meeting those two requirements, I guess on a base level, it does comply. There are obviously other things that are required of the policy, but if it’s a strata policy with an Australian insurer, generally their policy wordings will comply with the act.
Insurers normally won’t go outside of what is already in writing in the contract and their policy wording. The main thing for you as the owner is to ensure that the sum insured matches the rebuild value, and you’re insuring a strata policy with an Australian insurer. Generally, you’ll find that what you’ve got in place is compliant. You can if you want, but there’s no specific need to engage a strata manager for a duplex. Whether you do or don’t have a strata manager doesn’t impact your compliance around the insurance policy.
Tyrone Shandiman
Strata Insurance Solutions
E: [email protected]
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.
This post appears in the July 2021 edition of The NSW Strata Magazine.
Question: The Risk associated with Flooding, earthquake etc are rated as extremely low and, from a statistics viewpoint, unlikely to happen. Does the insurance industry rate our area as per a group of postcodes?
We are concerned our Property Insurance is too expensive based on a total loss scenario.
Due to the layout and construction of our scheme, fire hazard and its associated risk is low. The associated risk of the complete complex burning down would be rated as extremely rare or very unlikely based on any reasonable reference matrix chart as we have multiple separate buildings.
We are currently insured on the basis that total destruction is inevitable and the rebuilding of the entire site would be the outcome?
Is there space within the Insurance industry to consider the cost of strata Insurance based on the complex‘s layout and its subsequent risk assessment other than total destruction.
The Risk associated with Flooding, earthquake etc are rated as extremely low and, from a statistics viewpoint, unlikely to happen. Or does the insurance industry rate our area as per a group of postcodes?
Answer: Insurers don’t just rate on postcode.
Insurers don’t just rate on postcode. Rating by insurers looks at a number of factors, including construction, the number of levels, how many buildings there are, the roof space, so obviously a greater roof space, there’s a high potential for Storm Damage, or is it a high rise building with sprinklers and so on? So insurers do look at the building and the matrix of the building.
I sat down with an insurer once and they said they rate on a maximum any one loss of 40% for certain buildings. I guess what you’re saying is probably correct for your building, but insures in the questions that they asked they do form their own risk profile of your building as well, and they do rate on risk and the premiums are reflective of this.
Tyrone Shandiman
Strata Insurance Solutions
E: [email protected]
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.
This post appears in Strata News #475.
Question: Does strata insurance cover public liability for parking bollards installed on non-common areas, ie they are on strata title. Also, does it cover public liability for private skip bins and other gear that is kept on strata title parking lots?
Answer: Cover under a public liability policy is subject to the terms, conditions and exclusions that apply at the time after the insurers assessment of the claim.
Generally speaking, strata insurance policies provide cover for liability for personal injury or property damage in connection with the ownership of common property.
If the bollards are on the strata title and a claim was made against the owners corporation the policy would indemnify the owners corporation, but not withstanding the insurer may seek to deny liability to the claimant if they believe a reasonable defence exists (for example if the bollards were not on common areas and for the exclusive use of a lot).
Liability claims are considered on a case by case scenario by insurers, solicitors & judges (if the claim ends up in court) and for this reason it is not possible to give a “one size fits all” answer to a hypothetical scenario as there can be number of factors that can change the outcome of any liability claim.
Upon lodgement of a claim, the insurer will review the circumstances and after seeking legal advice, will either defend the claim or seek to settle the matter, depending on the insurers view of what is the most commercial outcome factoring in expenses (such as defence costs & settlements) and the insurers view on prospects of successfully defending the claim.
Cover under a public liability policy is subject to the terms, conditions and exclusions that apply at the time after the insurers assessment of the claim.
Tyrone Shandiman
Strata Insurance Solutions
E: [email protected]
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.
This post appears in the May 2021 edition of The NSW Strata Magazine.
Question: A motorcycle was stolen from common property. Would this be covered under the Strata’s insurance as it was parked on common property?
My son recently had a registered motorcycle stolen from the designated bike rack area in our P2 car park level which is protected by a swipe access roller door.
Would this be covered under the Strata’s insurance as it was parked on common property?
Answer: The only way a claim for a stolen motorcycle to be considered under strata insurance is a public liability claim made against the owners corporation.
Strata insurance covers building & common are contents as defined in strata legislation.
Motorcycles do not fall within legislative requirements for strata insurance and are therefore not covered by the property section of a strata insurance policy.
The only way a claim for a stolen motorcycle to be considered under strata insurance is a public liability claim made against the owners corporation. The motorcycle owner would need to demonstrate that the owners corporation were legally liable for the loss sustained. A common claim under a public liability policy is negligence, being that the owners corporation had a duty of care to the motor cycle owner and that they breached that duty of care.
While the standard of care imposed on an owners corporation is high, it is not unlimited. Defences to a negligence claim by the motorcycle owner may be that the owners corporation does not have a duty of care to secure the motor cyclists property (it is the motor cycle owners responsibility) and also that they took all reasonable actions in the circumstances to secure the car park. The owners corporation may also have specific defences in their by-laws specific to the property in question.
We always recommend that the motor vehicle / cycle owner contact their motor insurer in the first instance to make a claim and if the motor insurer believes the owners corporation are legally responsible they can pursue a recovery against the owners corporation.
Tyrone Shandiman
Strata Insurance Solutions
E: [email protected]
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.
This post appears in the March 2021 edition of The NSW Strata Magazine.
Question: We run a SEPP 55, over 55’s independent living strata titled retirement village with 104 properties. Do we need special property insurance because we are a retirement village?
We run a SEPP 55, over 55’s independent living strata titled retirement village with 104 properties.
Is there any reason why we need special property insurance because we are a retirement village?
As property insurance only relates to the property, can standard strata insurance apply rather than us being in a special class and potentially more expensive class grouped with Aged Care?
Answer: It can sometimes be more appropriate to insure under a strata policy, but it can sometimes be more appropriate to not.
It does depend on the insurer and what the insurance guidelines are. It can sometimes be more appropriate to insure under a strata policy, but it can sometimes be more appropriate to not.
With retirement villages, I do know that some strata insurers don’t insure retirement villages, and in that case, it might be more appropriate that the village is placed on a separate property policy with an insurer that does insure retirement villages.
It is an individual, case by case situation whether it’s appropriate to ensure with strata or separately. What the broker should be doing is at least canvassing all the strata opportunities with all the strata insurers, and also others and reporting to the committee or the owners Corporation: ‘Here are the results of the quotes that we’ve sought’.
Tyrone Shandiman
Strata Insurance Solutions
E: [email protected]
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.
This post appears in Strata News #408.
Question: Does Insurance cover any structure that is not compliant with the BCA or any damage from fire that emanates from that structure?
Does Insurance cover any structure that is not compliant with the BCA or any damage from fire that emanates from that structure?
I’m in NSW and I live in a block of 8 villa units. The unit next door to me has put a roof on a car port on the boundary with me. They have then put on solar panels and an inverter, which overheats. I live in fear of not being properly insured.
Is it is unlawful to put a roof to the boundary unless there is also a fire wall? Our Strata management has been no help.
Answer: Insurers do not give advice on whether a building is compliant.
I’m going to quote one of the most widely used policies out there in the market. Insurers do not give advice on whether a building is compliant. They will only assess compliance of building codes at the time of a claim, and determine if that meets one of the policy exclusions or not.
There are three major exclusions that owners should be aware of:
- insurers do not pay for the cost of replacement, for the cost to rebuild, replace or repair illegal installations (so they don’t cover the installation itself).
- They do not cover damage caused by non rectification of a property defect error or omission that you were aware of, or should have been reasonably aware of.
- they also do not cover the cost of rectifying the faulty or defective materials or faulty or defective workmanship design or specification.
I think there are some exclusions that might apply to that situation. I guess it comes down to knowledge of the defects. Who is saying that this property isn’t defective? Is it a lot owner that may not fully understand the legislation and the building codes? Or is there an engineer or builder that’s pointing it out to the body corporate or owners Corporation as being a defective structure?
If the owner doesn’t feel that the issue is being addressed, as always try and resolve the issue with the committee and an owners Corporation without it being a conflict. There are always dispute mechanisms available through NCAT if you don’t feel that you’re getting satisfactory responses from the owners Corporation.
Tyrone Shandiman
Strata Insurance Solutions
E: [email protected]
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.
This post appears in Strata News #389.
Have a question about insurance requirements in strata or something to add to the article? Leave a comment below.
Read next:
- NSW: Q&A How Often Do We Need to Have an Insurance Valuation?
- NSW: Q&A How Many Storeys is my Building (Home Warranty Insurance)?
- NSW: Owners Corporations, Common Property Repairs and Insurance – A Tricky Relationship
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