Question: We voted to insure our lots individually in our three lot subdivision. Are the owners also required to have public liability insurance for common property?
Our owners corporation (OC) is a three lot subdivision in Victoria. Thanks to the developer, our lot entitlements are not split equally.
We recently voted to insure our lots individually. The OC will insure the common property grounds, e.g. the driveway, subterranean stormwater and sewerage, mailboxes, smart meter box and boundary fence.
Although Public Liability Insurance will be included for the common property, what are the owners’ legal obligations? Are we also required to insure the driveway? We have sourced information from Consumer Affairs, but our owners have differing opinions on how to interpret the information.
What are the legal obligations for small OCs in our situation?
Answer: The owners are obligated to insure the common property for property damage and public liability.
The owners are obligated to insure the common property for property damage and public liability. We recommend your OC get an insurance rebuild valuation. This will recommend how much to insure common property for, including the driveway.
The Owners Corporations Act 2006, Part 3, Division 5 Section 59 and 60 outlines the owners corporation’s obligations to insure. Section 61A allows owners corporations with multiple single dwellings to resolve each lot owner is responsible to insure their lot. However, that does not negate the obligations under Sections 59 and 60 to maintain property and liability insurance over the common property.
59 Reinstatement and replacement insurance
- An owners corporation must take out reinstatement and replacement insurance for all buildings on the common property in accordance with this Division.
60 Public liability insurance
- An owners corporation must take out public liability insurance for the common property in accordance with this section.
61A Insurance for multiple single dwellings on a plan of subdivision
An owners corporation on a plan of subdivision for multiple single dwellings with common property may, by unanimous resolution, resolve that the lot owner of each single dwelling is responsible to insure their lot.
This post appears in the November 2024 edition of The VIC 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.
We are four townhouses built on a common slab – converted from a former commercial building – but with no other common area (no shared driveways, entrances or garages). We have individual meters for all utility supplies.
We would like advice as to whether we would be classified as a services only corporation, and also whether we would be able to take out separate building insurance (our preferred option) as we each have varying levels of fit-out, having purchased each one as shells.
Thank you.
Hi KK
See the Q&A in the article above: Question: For a small 4 unit strata scheme, are we legislated to hold AGMs or carry out any other activities in terms of the owners corporation?
Hi Nikki
Thank you for your response.
However, my query does not relate to holding AGMs but rather the appropriate classification for our property given the lack of common area (aside from the slab), and the insurance options available in this scenario.
I would appreciate it if there is an expert in the community is able to provide us with guidance or alternatively, someone who has had a similar set-up.
Hi KK,
I am happy to look at the insurance aspect of this. Can you confirm which state you are in?
The general principle is if the buildings share walls/roofs they should be insured under one policy as insurers will not insure part of a property.
But once I know the State you refer to I can review specific legislation.
Tyrone Shandiman
Strata Insurance Solutions
There are two units on our property. We both own our units. Is it compulsory to insure the shared Driveway?
We live in South Australia.
The Strata Titles Act 1988 states “A strata corporation must keep all buildings and building improvements on the site insured to their replacement value.” This implies the buildings including driveway must be insured under a strata policy and include public liability cover.
I am the owner of one of 2 units on shared ground including water tanks, bore pump and water treatment plant that service both properties. There is a shared electrical meter that runs the shared equipment that we go halves in paying. We never set up a body corporate as the previous(and first) owners of the 2nd unit were amicable and I would usually pay the bills (as they were initially in my name as the original owner before subdivision) and they would pay me back their half. They sold a few years ago and the new owner says she cannot afford to pay all of her half and I still have a large outstanding amount owed, with the new insurance bill becoming due in a few weeks. I don’t want to leave the common and my property uninsured so will end up having to pay for her buildings insurance again. Is it possible to just get insurance for the common fixtures (not the units) and we each pay our own unit building insurance? I am guessing we are a tier 5 but can’t find much info online about what legal responsibilities that entails
Hi Janine
This above Q&A should assist. Gary Howell from MBCM Strata Specialists states: “there is no obligation on owners [of a duplex] to take out insurance and therefore no avenue for you to recover any money that you choose to spend on joint insurance.”
You can fid out more about tier 5 properties and their requirements here: VIC: New Five Tiered System for Owners Corporations
Thanks
Hi
I am one of five units with separate titles, there is a Common Property driveway included.
My question is; Do we need a Body Corporate? if not do have to insure the Common Property driveway?
Thank you
Hi
This article should assist – VIC: New Five Tiered System for Owners Corporations
Hi there,
I have a few questions about body Corp fees & charges. It seems no one can answer any of them. I have tried consumer affairs , there response “it’s on the website” . Not much help at all. I have called a few other BC company’s & again not much help !
I am sure BC regulations are the same as in fees & charges depending of course whether they are apartments or townhouses.
Are you able to give me some advise / answers please.
Thank you for your time.
Hope to hear from you soon
Kind Regards
Terri
Hi Terri
You may find the answer you are after here:
VIC: Q&A Levies, Lot Allocations and Entitlements
VIC: Q&A Owners Corporation Levy Increases and Due Dates
If you still have questions, you can submit them here:
Ask a Strata Question
I am still a little confused as to if or not we need to take out common ground insurance; we live in a block of 2 units both privately owned and share only 1 driveway; Suncorp told me that we need full strata insurance to cover both buildings and the driveway but another insurer has told me we just need cover for the driveway and can each take out our own building insurance. Please can someone help advise what cover we need?
Thank you
We have in May this year purchased a house in a block of 6 units which has common property. I immediately on confirmation of sale, taken out house insurance, even though it is a rental property. Now I have discovered that the house insurance was legitimate because I insured it though our usual insurance company that did not cover Strata Title, so had to cancel the insurance. The Corporate Body has been handling the property with only common area insurance. Now other owners will be discovering (due to me) that their current ‘house insurance’ may not cover their purchased houses, being rental or otherwise, as we are a Strata Title. Is the Owners Corporation legally responsible for ensuring that all the Lots are insured, houses and common areas regardless of the individual owners ideas? I can’t afford not to have the property uninsured but where do I go if the other owners refuse to pay for strata title insurance? At time of sale the Body Corporate did not mention/discuss with me that the properties were uninsured through the Body Corporate, they only mentioned in writing the ‘Common Area ‘ insurance. Please help. I have urged the Body Corporate to take action to resolve the issue.
Regarding questions similar to:
“We live in a Unit in a small 3 lot scheme in Victoria. The only common property is a common driveway…”
That have answers similar to:
“The owners can insure their properties separately (home insurance), however a separate strata policy must be taken out for the driveway…”
Could it be explained how s.63 of the Owners Corporations Act 2006 can be avoided?
S.63 seems to imply that if there is any common property at all, strata (building) insurance must cover all of the lots. And that it’s only if there is no common property and by unanimous resolution, that the obligation for lot (building) insurance can be passed to the lot owners.
“63 Insurance not required where there is no common property
By unanimous resolution, an owners corporation may resolve that, if there is no common property, each lot owner must arrange for the lot owner’s own insurance.”
Hi Austman
Very good point mentioned and I appear to have not fully considered the legislation. Following your comments, we have updated the article. Thank you for pointing this out to us.
Tyrone Shandiman
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.