Question: To avoid paying commission, are we able to directly contact and insure with the same insurance company we have insured with over the past few years?
We live in a block of 12 units in Sydney NSW.
Last year we were charged around $500 by our Managing Agents to obtain three (3) Building Insurance quotations from the broker they use and to insure the building.
Our Strata Committee thought that this amount was excessive considering the Managing Agents also obtain a Commission. Do you agree or disagree?
Can a Strata Committee obtain their own Building Insurance quotations, and then advise our Managing Agents accordingly?
Does a Strata Committee under Law have to obtain three (3) quotations OR are we able to directly contact and insure with the same insurance company we have insured with over the past few years?
Answer: With regard to your charges and insurance commissions, it’s important to know what the Commission’s are for
You can insure directly with an insurer but be aware that, in New South Wales, there is a specific requirement to get three quotes for the insurance every year. The two issues around insuring directly for committee is:
- who’s advising you that the policy is appropriate and correct? You’re best using a broker for that, and they’re qualified to give advice in that regard.
- Who manages the claims and the claim process as well.
If I was a committee member with no experience in insurance, I would use a broker, knowing the services that brokers offer.
With regard to your charges and commissions, it’s important to know what the Commissions are for. If you’re being charged $500 just to get a quote, and I haven’t seen that in many strata management contracts, that would be something I would be looking at when my strata management agreement came due for renewal, to discuss whether that fee was appropriate.
This post appears in the June 2021 edition of The NSW Strata Magazine.
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.