What’s covered by Strata Building Insurance?

What is Building Insurance?

Quite simply, Strata Building Insurance protects the Owners Corporation for damage sustained to the building as a result of an Accidental or Malicious act. Common examples are:

• Fire/Arson
• Vandalism
• Glass Breakage
• Storm/Tempest
• Vehicular Impact
• Burst Pipes
• Lightning Strikes
• Burglary & Theft
• Earthquakes

A common misapprehension is that Strata Building Insurance protects the Owners Corporation for the routine maintenance items or building defects such as the repair of leaking shower trays, settlement/movement cracks in walls & ceilings or concrete cancer, unfortunately this is not the case. The easiest comparison to think of is motor vehicle insurance. You can insure your vehicle against having an accident, however you cannot insure your vehicle for wearing out. This same principle applies to Strata Building Insurance.

How is an owner of a lot protected?

Every Owners Corporation has a mandatory duty to insure ‘the building’ against accidental or malicious damage – section 83(1), Strata Schemes Management Act 1996 (the Act).

Lot space within a strata scheme is commonly defined as;

“the cubic air-space contained within the inner surface of the boundary walls, under surface of the ceiling and upper surface of the floor” Under this definition the lot owner is responsible for the repair, replacement and maintenance of all building components housed within the lot, such as:

• Internal walls
• Shower screens
• Internal doors
• Built-in wardrobes
• Toilets, baths & basins
• Kitchen sinks, cabinets and bench tops
• Appliances such as wall and bench ovens, cook tops, range hoods, hot water heaters and bathroom & laundry exhaust fans

For example, a leaking tap washer in the kitchen or leak through a shower screen is the lot owners’ responsibility to maintain. However, by virtue of the term ‘the building’ being included in section 83(1), many of the building components contained within the ‘lot’ are protected by the mandatory Building Insurance that is taken out by the Owners Corporation.

Simply speaking these items are the lot owners’ responsibility for the purposes of repair, replacement and maintenance, however they are protected by the Strata Building Insurance if damaged via an insurable event.

Are my Contents Covered?

No, the contents and fittings contained within your lot ARE NOT protected by the Strata Building Insurance and are specifically excluded from the policy, items such as:

• Carpets and underlay
• Light fittings
• Any furnishing or personal contents
• Floating floorboards
• Wall paper
• Curtains and blinds
• Paint work on walls and ceilings
• Wall tiles located on internal walls
• Electrical  appliances that are not hardwired into the building, eg. clothes dryers, dishwashers or microwaves, TV’s etc.

Owner-occupiers may extend the cover on their contents insurance to include the items not covered by the strata building Insurance. Most major mainstream insurers in NSW are aware of the delineation between strata building insurance and contents insurance for a strata property and are happy to extend home contents insurance to include the items listed above.

Non-resident or investor owners may take out ‘Landlords Insurance’ for a sufficient sum to cover the fittings of their lot. However all owners should undertake their own inquires with their insurer or insurance broker to ensure their contents are adequately protected by their contents policy.

This should be used as a guide only and individuals should refer to the Product Disclosure Statement issued by their insurer.