These question about individual strata insurance for a small strata scheme in Victoria have been answered by Simon Plummer, StrataRatings and Whitbread Insurance Brokers.
Question: Although we have an Owners Corporation, we have no common property. How does insurance work? Do we need individual strata insurance? Should Public Liability be part of this?
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I live in a home that is made up of 3 houses. It was originally a subdivision. The builder set up the Owners Corporation. There is NO common property at all, no common driveway, nothing. None of us are the original owners, so started looking into individual strata insurance.
It seems this can’t be done – well, at least not without a lot of expense. We have no meetings or anything as there is really nothing to discuss. We all pay for any/all maintenance for our own houses (which are houses, not joined units). We only need to come together once a year to pay for our portion of the building insurance.
We just noticed that there is a $10,000,000 public liability insurance added on to our policy. The conveyancer we just consulted about possibly cancelling the Owners Corporation told us that, as we have no common property, any public liability claim would be against us individually, not the body corporate. If there was a claim they would refuse to pay it as it wouldn’t have occurred on common property.
Hence I asked our broker to remove this from the policy. She told me that it is compulsory and can’t be removed. Is this correct? It doesn’t seem right to me that you have to pay insurance for something you could never claim on.
Answer: As this property is an Owners Corporation, it must comply with the regulations set out in the Owners Corporation Act 2006
As this property is an Owners Corporation, it must comply with the regulations set out in the Owners Corporation Act 2006.
To answer the question we have quoted the relevant expert from the Act. Under the Owner’s Corporation Act of 2006 it states the following:-
OWNERS CORPORATIONS ACT 2006 – SECT 60
Public liability insurance
(1) An owners corporation must take out public liability insurance for the common property in accordance with this section.
(2) The public liability insurance required under subsection (1) is insurance for any liability of the owners corporation to pay compensation in respect of—
(a) any bodily injury to or death or illness of a person; and
(b) any damage to or loss of property—
which is sustained as a result of an occurrence or happening in connection with the common property.
(3) The owners corporation must ensure that, in the insurance which the owners corporation has under subsection (2), the limit of liability is a minimum of $10 000 000, or if another amount is prescribed, that other amount, in any one claim and in the aggregate during any one period of insurance.
If owners require further clarification or have any questions about individual strata insurance, we suggest contacting Consumer affairs.
This post appears in Strata News #222.
Whitbread Insurance Brokers
T: 1300 424 627
E: info@whitbread.com.au
Please note this Q&A response is not intended to be personal advice and you should not rely on it as a substitute for any form of advice. Please contact Whitbread Associates Pty Ltd ABN 69 005 490 228 Licence Number: 229092 trading as Whitbread Insurance Brokers for further information.
Question: I have just purchased a unit and have been told by the real estate agent the body corporation was never exercised and the other owners got their own individual strata insurance. How can this be?
I have a query regarding strata insurance. I have recently purchased a property in Victoria which has an inactive body corporate (stated in the contract of sale). The property is a unit and there are 3 units in total. The common property shared is the driveway.
There is an Owners Corporation Search Report which states that the land is affected by owners corporation and there is no manager. I have been told by the real estate agent that body corporation was never exercised and the other owners got their own individual strata insurance. I thought this was not possible as insurance companies do not provide cover for one property if it is covered by body corporation.
I am looking to move in next week and will try to make contact with the owners prior to that but what should the necessary steps I take to ensure I am covered by insurance when I move in? Do I need to take up strata insurance myself across the entire block, or can I insure for only common property? I am a bit conscious that if something adverse were to happen post moving in and I do not have insurance then I may be left stranded. Can you please advise what the best steps for me might be?
Answer: The Victorian legislation requires that and Owners Corporation insures the common property, all buildings and the Owners Corporations Legal Liability. There is an exception for some two-lot schemes, however, being a three unit property, insurance would be required.
The Victorian legislation requires that and Owners Corporation insures the common property, all buildings and the Owners Corporations Legal Liability. There is an exception for some two-lot schemes, however, being a three unit property, insurance would be required.
Here’s a brief summary.
In the case that the Owners Corporation is not active, it would be prudent to make it active as there are many legislative requirements that need to be complied with. In the case that the owners have limited knowledge of these requirements, it could be a good option to appoint a Strata Manager. In any case, it is very important that the Owners Corporation arranges insurance to ensure there is cover in the case an event occurs.
This post appears in Strata News #175.
Simon Plummer
StrataRatings
E: simon.plummer@strataratings.com.au
This article is not intended to be personal advice and you should not rely on it as a substitute for any form of advice.
Read next:
- Owners Corporation Insurance Requirements Victoria
- VIC: Q&A Underinsurance, Building Sum Insured and Strata
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It is to be noted that despite an Owners Corporation having more than 2 Lots there may not be a requirement for individual units to be insured by the Owners Corporation. It comes down to whether the building is located on common property. Refer S.59(1) of the Owners Corporations Act.
Often stand alone units/townhouses are not located on common property and therefore the Owners Corporation is not required to take out insurance. It is up to an individual owner to obtain their own insurance cover.