This article discusses whether freestanding lot owners can opt out of body corporate insurance in Queensland, explaining when it may be allowed, the legal framework, and the practical insurance risks for the wider scheme.
Question: Can owners of free-standing lots opt out of the body corporate building insurance?
Our standard format plan complex is more than 20 years old and consists of duplexes plus single-level and two-storey standalone homes. From the records we can find, the annual building insurance premium has always been paid by all lot owners, whether their homes are attached or free-standing.
I believe that under Queensland legislation, a lot owner must insure their own building if it is free-standing (does not share a common wall with another building) and is registered under a standard format plan. The legislation also says a body corporate can set up a voluntary insurance scheme to insure buildings that do not have common walls, but owners of free-standing lots do not have to take part in that scheme.
Several owners of free-standing lots have stated they do not want to participate in the body corporate building insurance. There is no evidence that these owners originally “opted in”, so it appears a voluntary insurance scheme has always operated by default.
What options does the body corporate have? Can owners of free-standing lots opt out of the body corporate building insurance?
Answer: Many insurers are reluctant—or outright refuse—to provide cover for only part of a strata complex.
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.
Tyrone Shandiman Strata Insurance Solutions E: tshandiman@iaa.net.au P: 1300 554 165
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.
This post appears in the March 2026 edition of The QLD Strata Magazine.
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