WA: Do small strata schemes need one shared insurance policy?

Question: If a strata plan number exists, must a strata insurance policy be active, or do exemptions exist for small schemes?

Our commercial property consists of two units with a common driveway. The owners currently insure the buildings separately, and one owner covers the common driveway.

My understanding is that if a strata plan number exists, a strata insurance policy should be active. Do exemptions exist? For example, if units are under a certain number, can owners elect to insure separately?

Answer: It depends on the type of strata scheme. Single tier schemes have specific exemptions.

In Western Australia, the answer depends on the type of strata scheme.

For most strata schemes, the strata company is responsible for arranging a single strata insurance policy covering the insurable assets of the scheme. However, the Strata Titles Act 1985 (WA) contains special provisions for single tier strata schemes, which commonly include duplexes and groups of villas or townhouses.

In a single tier strata scheme, each owner is generally responsible for insuring their own building. The strata company remains responsible for insuring any common property (such as a shared driveway) and arranging public liability insurance.

There are further exemptions. If the only common property is limited to items such as boundary fencing or certain airspace, or if the owners unanimously resolve that the statutory insurance requirements for the common property are not to apply, the strata company may not be required to maintain common property insurance. Importantly, any owner can later require those obligations to be reinstated by giving written notice.

Based on your description of two units sharing a common driveway, the shared driveway is common property. In that situation, it is quite common for each owner to insure their own building while the strata company insures the common driveway and maintains public liability insurance for the common property. That arrangement can be compliant in WA, provided it meets the requirements of the Strata Titles Act and any applicable strata company resolutions.

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 and the specific coverage afforded under their policy wording. Shandit Pty Ltd T/As Strata Insurance Solutions is a Corporate Authorised Representative (No. 404246) of Insurance Advisernet Australia AFSL No 240549, ABN 15 003 886 687.

This post appears in Strata News #808.

Tyrone Shandiman
Strata Insurance Solutions
E: tshandiman@iaa.net.au
P: 1300 554 165