Question: In a two-lot community titles scheme with freestanding houses, can each owner insure their own building instead of sharing a body corporate policy?
We have two freestanding houses on separate lots, divided by a covenant area (nature strip), and managed as a body corporate under a community titles scheme. There are no shared buildings, only shared easement areas. Are we obliged to share building insurance for the individually owned houses?
The property is a building format plan, which does not seem applicable. Our current policy describes the property as one unit block, even though it consists of two separate houses. Does this leave the houses underinsured, making claims unenforceable? Can I arrange my own building insurance?
Answer: Legislation requires the body corporate to hold one policy insuring both dwellings under the scheme.
As the Community Titles Scheme is a specified two-lot scheme and is registered under a building format plan, the relevant insurance requirements are set out in section 49 of the Body Corporate and Community Management (Specified Two-lot Schemes Module) Regulation 2011.
Section 49 requires the body corporate to insure, for full replacement value, each building in which a lot is located, to the extent that the building is scheme land. This obligation applies even if the lots contain freestanding dwellings with no common walls.
This means:
- The body corporate must arrange a single policy of insurance that covers both dwellings.
- Lot owners cannot take out separate building insurance for their own dwellings, as this would not meet the requirements of s.49.
- The policy must provide for reinstatement as new and cover incidental costs such as debris removal and professional fees.
It follows that while the physical layout of the properties might suggest individual insurance is more appropriate, the legislation requires the body corporate to hold one policy insuring both dwellings under the scheme. However, it is important that the policy accurately describes the properties and that the sums insured reflect the full replacement value of both houses.
This post appears in the October 2025 edition of The QLD Strata Magazine.
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.