This article discusses unapproved renovations and strata insurance, explaining when insurance still applies and when unauthorised works may create risks or extra costs for a scheme.
Question: If an owners carries out substantial renovations without seeking approval from the owners corporation, does this affect our strata insurance?
One of the owners in our black of 4 units carried out renovations, adding an extra bedroom in the roof space. They did not seek any approval from the owners corporation. They are now selling the unit.
Do the unapproved renovations affect our strata insurance? How do we resolve this.
Answer: Strata insurance is designed to factor in that owners will renovate their property from time to time.
Strata insurance covers building improvements, fixtures and fittings and does not require those items to be approved by the Owners Corporation in order for cover to apply. The owner just needs to demonstrate the property meets the definition of “insurable property” or “building” in accordance with the insurers Product Disclosure Statement.
Therefore, the owners unapproved renovations do not impact insurance as such – but for the following exceptions:
- The renovations result in claims; or
- The renovations require the building sum insured to be increased to cover the additional cost of those renovations. Even in such instances, an additional cover under some policies for “Lot Owners Fixture & Fittings” is designed to cover this shortfall.
Strata insurance is designed to factor in that owners will renovate their property from time to time.
This post appears in Strata News #624.
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