Question: I am a new owner in a strata building. How do I find out what is common property and covered by the body corporate insurance? How about changes to my lot that have been made over time. Is there a record of these and what is covered by the insurer?
Answer: The basic principle is that if you pick the unit up and shake it anything that falls out is the lot owners contents
William Marquand:
To check the coverage of your insurance contact your body corporate manager and ask for a copy of the certificate of currency and policy disclosure statement for the insurance for your scheme. If you have a specific question your manager can refer it to the scheme’s insurance broker and they may be able to provide an answer.
Generally, the extent of your insurance coverage will be determined by whether your scheme is a standard format or building format plan. The government website has a detailed explanation of what should be covered and is worth reviewing: Queensland Government: Insurances in a body corporate
As per that website the body corporate must have insurance for:
- common property
- body corporate assets
- public risk
- every building which contains a lot.
- It is possible that your insurance coverage will be more extensive than that, but you will need to make sure you understand what is and isn’t common property.
The website also provides a definition of what is a building, stating:
A ‘building’ includes any improvements made to the building and fixtures added to the building. It does not include:
- temporary wall, floor and ceiling coverings, carpets
- fixtures that can be removed by a lessee or tenant at the end of a lease or tenancy
- mobile or fixed air conditioning units for a particular lot
- curtains, blinds or other internal window coverings
- mobile dishwashers, clothes dryers or other electrical or gas appliances that are not wired or plumbed in.
So, in most cases, your contents are not covered.
The question asks how you know about changes to the lot. Ideally, all changes should have been recorded as having been approved by either a committee or general motion and you should be able to check the body corporate records for these. In practice that may not have happened. However, from an insurance perspective the body corporate is responsible for insurance items defined by legislation as “building” (i.e. permanent fixtures) including property inside the boundary of a lot.
Tyrone Shandiman:
The basic principle is that if you pick the unit up and shake it anything that falls out is the lot owners contents + temporary flooring such as carpet, blinds & curtains, appliances that are not permanently attached, aircon units servicing an individual lot (QLD only).
Other permanent fixtures including but not limited to kitchen & bathroom cabinetry are covered by strata insurance subject to the policy terms, conditions & exclusions.
Lot owners should also have contents/landlords insurance to cover property not insured by the strata policy & liability within the lot and I always suggest lot owners add an extra say $10,000 contents cover on what they believe should be covered for any incidental items not considered as it might only cost say $50 for the extra piece of mind.
Renovations that fall within the definition of the insurers policy wording for “building” (i.e. permanent fixtures) will form part of the strata insurance.
Most policies will have a provision for “lot owners fixtures & fittings” which is designed to cover instances where lot owners replace existing or install additional fixtures and fittings in their lot/unit without the Body Corporate being aware of such improvements. As a consequence, the cost of these improvements may not be included when arriving at the building replacement cost, thus increasing the possibility of underinsurance in the event of a major loss. The automatic cover provided by the insurer allows for extra re-build costs in addition to the building sum insured if a lot owner has upgraded their property without the body corporate knowing or factoring this into the building sum insured.
Insurers do not keep a record of alterations lots.
William Marquand Tower Body Corporate E: willmarquand@towerbodycorporate.com.au P: 07 5609 4924
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.