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.