Can owners of free standing lots opt out of body corporate building insurance

Owners of freestanding properties within the complex will have the opportunity to opt out of the body corporate insurance if they choose. However, it is important to note that, under best practice, this should be an opt-in arrangement, reviewed annually to ensure clarity and compliance with the Body Corporate & Community Management Act 1997 (and regulations)

To progress this matter, raise it formally with the body corporate committee or your strata manager, as any changes to the current insurance structure would need to be properly reviewed and implemented in accordance with the relevant legislation and body corporate processes.

Before making a decision, it is crucial to consider the broader implications for the body corporate and all lot owners:

• Insurance market constraints: Strata insurers typically require full participation from all lots within the scheme. Many insurers are reluctant—or outright refuse—to provide cover for only part of a strata complex. This means that if a portion of the owners opt out, it could jeopardise the availability of insurance for those who remain in the body corporate policy, including those who have no provision to opt out.
• Cost-effectiveness and risk considerations: Depending on the circumstances of your body corporate—including past claims history, potential building defects, or materials used—remaining insured under the strata policy may be a more viable and cost-effective option. In many cases, strata policies provide more cost-effective solutions than individual home insurance policies.

Given these factors, before opting out, we strongly recommend ensuring that obtaining individual building insurance is both feasible and beneficial for your specific circumstances. We encourage owners to seek independent advice from an insurance professional to make an informed decision that does not inadvertently create challenges for the broader body corporate.

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 Advisenent Australia AFSL No 240549, ABN 15 003 886 687.