QLD: Should we remove temporary accommodation and loss of rent cover from strata insurance?

Question: If we have temporary accommodation and loss of rent cover with our landlord insurance, should we drop this from our strata insurance policy?

We own a lot in a duplex with a shared wall. We are owner/occupiers, and the other owners rent their lot.

The investment owners have requested we drop temporary accommodation and loss of rent cover from our strata insurance policy. Their landlord insurance covers them for this.

If we remove this cover from the strata insurance, can we insure our unit for temporary accommodation cover?

Answer: The owner of the rented lot may not fully understand the implications of their request.

There are several important factors to take into account, as the owner of the rented lot may not fully understand the implications of their request:

1. Understanding landlord insurance vs. strata insurance: The owners of the rented unit may be misunderstanding the scope of their landlord insurance. Typically, loss of rent cover under a landlord’s contents policy only applies to damage affecting insured contents (e.g., carpets) rather than structural damage to the building itself. In contrast, the loss of rent cover under the strata insurance policy is designed to apply when the building sustains damage that renders it uninhabitable. For this reason, it is important for landlords to have both loss of rent cover under their contents insurance and separate cover under the strata policy to ensure comprehensive protection against different types of damage.
2. Automatic inclusion in strata policies: Most strata insurers include loss of rent and temporary accommodation cover as a standard feature, often set at a percentage of the building sum insured (e.g., 15%). In many cases, this cover cannot be removed. The first step should be to check whether your current insurer — or any alternative insurer — offers the option to exclude this cover. If no such option exists, this may resolve the concern outright.

I’d recommend discussing these points with the other owners to ensure they fully understand the implications of their request. Let me know if you’d like assistance in reviewing your policy options.

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.