Residential Strata Insurance
Residential Strata Insurance – What is it?
A Strata Title provides the legal ownership of a portion of an apartment block. These portions are known as 'lots'. Owners of a ‘lot’ receive a title deed to their unit. You can sell, lease or live in your lot as you would a house. Each unit owner owns the interior spaces of the lot, but the building as a whole is owned by the Owner’s Corporation.
Strata Title Insurance is issued to the Owner’s Corporation and covers the building and other common area contents as well as legal liability. Each individual unit holder is responsible for insuring their own contents and liability for incidents occurring inside their unit.
In addition to the cover for the building, and common liability the residential strata insurance can also provide the following covers in accordance with the strata titles act.
Some Residential Strata policies can accommodate risks that are 100% residential, 100% office or commercial though some insurers do not write high hazard tenant occupations (including wood workers and wok cooking risks) or any mix in between without the loss of benefits for residential units. Many insurers will not deal directly with body corporate entities nor will they appoint strata managers as Authorised Representatives. Therefore utilising the services of an Insurance Broker to obtain cover for you is a huge advantage.
The key benefits and features of Residential Strata policies vary amongst insurers and while we seek to get you a good price, you also need good cover. A broad package backed by strong insurers offering an excellent claims service should be your priority. You do get what you pay for.
What can it cover?
The main sections of a Residential Strata Insurance policy includes the following:
Property – Buildings & Common Contents
This section of the policy insures your buildings and common contents for physical loss, damage or destruction by any cause (not otherwise excluded). Some of the benefits include:
- Accidental Damage – no sub-limit
- Temporary Accommodation, Loss of Rent Receivable, Failure of Supply Services, Infectious or Contagious Diseases, Murder or Suicide, Reletting Costs, Maintenance Fees and Removal and Storage of Lot/Unit Owners Contents
- Common Contents – usually up to 1% of buildings sum insured (in addition to sum insured)
- Common Contents in the open air (in addition to sum insured)
- Fusion – for motors
- Storm damage to gates and fences
- Lot / Unit Owners Fixtures and Improvements in Residential Lot / Units
- Building sum insured is not subject to a co-insurance or average clause
- Catastrophe cover – can be up to 30% buildings sum insured (in addition to sum insured)
- Breakage of Glass.
- Theft - loss or damage to your Insured Property as a result of theft or attempted theft.
- Loss of Keys
Additional benefits can be included with some insurers such as:
- Alterations & Additions
- Catastrophe Cover (automatic 15%)
- Emergency Accommodation/Meal Costs
- Emergency costs to minimise losses
- Fusion of motors up to 5kw (6.7hp)
- Inflationary Costs (CPI Increase)
- Loss of rent
- Modifications due to injury
- Property of Others
- Travel Expenses
Property Owners Legal Liability
This section of the policy covers the Owner’s Corporation or Body Corporate for their legal liability following an occurrence that causes personal injury or property damage. It can include:
- Cover for compensation the Insured becomes legally liable to pay for Personal Injury and Property Damage
- Legal Costs – in addition to the limit of liability
- Liability in connection with the Insured’s ownership of any underground or overhead services, roads, footpaths or bridges that form part of the property at the Situation
Additional benefits with some insurers can include:
- Liability in connection with the hire by any person of sporting or recreational facilities owned by the Insured – included
- Liability in connection with any social or recreational activities arranged for or on behalf of the Lot / Unit Owners or occupiers of any Lot / Unit – included
- Includes liability in connection with the application of pesticides, herbicides or fertilizers to Common Areas at the Situation or the Property Insured
- Includes liability in connection with the Insured’s ownership, use, control or possession of garden appliances, wheel chairs and golf buggies that do not require registration by any legislation or competent authority
- Includes liability in connection with Lot / Unit Owners’ Fixtures and Improvements of a Lot / Unit that is occupied solely for residential purposes
We recommend a Sum Insured of at least $20,000,000
Fidelity Guarantee covers the amount of any loss that the insured incurs as a result of fraudulent misappropriation of the Body Corporate’s funds. The loss must occur during the period of insurance and must be caused by a person who has responsibility to care for and protect the funds. Unfortunately some people in a position of Trust do not always act honestly. This cover provides protection should this happen.
- Cover for fraudulent embezzlement or fraudulent misappropriation of funds set aside for the purpose of management of the Body Corporate / Company affairs
- Cover can usually be available up to $100,000
Voluntary Workers Personal Accident
This section of the policy provides monetary benefits in accordance with a Schedule of Benefits listed in the policy in the event that a voluntary worker is injured or dies as a result of an accident while carrying out that voluntary work. Many Body Corporates have volunteers who provide Garden or maintenance services etc, so there is a need to look after them should they become injured. The Schedule can include:
- Death or total and permanent loss of both hands, or the use of both feet, or the use of one hand & one foot – 100% of the capital benefit selected
- Total loss of sight in both eyes – 100% of the capital benefit selected
- Total and Permanent loss of use of one hand or of the use of one foot or sight in one eye – 50% of the capital benefit selected
- Total disablement from engaging in or attending to usual profession, business or occupation – 100% of the weekly benefit selected up to 104 weeks
- Partial disablement from engaging in or attending to usual profession, business or occupation – 50% of the weekly benefit selected up to 104 weeks
- Travel expenses in obtaining medical treatment – up to 1% in total per incident of the capital benefit selected
- Capital benefits are usually available up to $200,000 depending on the insurer
- Weekly benefits often available up to $2,000 per week depending on the insurer
There are a number of additional benefits provided under this section of the policy that include:
- Domestic Assistance
- Funeral Expenses
- Miscellaneous Expenses
Office Bearer’s Liability
Office Bearers Liability will indemnify the committee members for Loss arising from a Wrongful Act which results in a Claim. A Wrongful Act could be anything from an error or omission, misstatement, defamation, breach of confidentiality, breach of trust and any other allegation of a breach of a duty of care while holding a committee position within the Body Corporate.
- Covers legal liability of office bearers for any wrongful act they commit
- Claims investigation, defence and settlement costs
There are a number of additional benefits and extensions of cover available including:
- Advancement of Defence Costs
- Continuous cover – that covers matters that should have been reported prior to renewal
- Cross Liability
- Extended reporting period benefit – if the cover lapses it can be extended up to 30 days
This provides cover against sudden and unforseen physical destruction or physical damage to machinery that requires repair or replacement to enable normal working of the machinery to continue. In a Residential Body Corporate, these can be the Pool pump, submersible pumps that deal with rain water run-off or Airconditioning systems forming part of the buildings. Cover can include:
- Breakdown of unspecified machinery – Available for machinery driven by motors not exceeding 5hp (4kw), limited any one incident.
- Breakdown cover for specified machinery
- Breakdown, collapse or explosion cover for specified boilers and pressure plant
- Automatic Cover for additional unspecified machinery – up to 90 days
This section covers Legal Expenses you are liable to pay following legal proceedings brought against you.
- Covers legal expenses in defence of workplace occupation health and other specific disputes – up to a selected limit.
- Cover can be available up to $100,000
This section covers reasonable and necessary Audit costs incurred due to an investigation of your financial affairs by a Government body.
- Covers fees of a professional advisor in relation to an audit of your business by the Australian Taxation Office or any other Government agency – up to limit selected
- Cover can be available up to $50,000
Other Sections that can be available also in a Residential Strata Insurance
Workplace, health & Safety Breaches
This covers you for legal expenses incurred in appealing against any imposition of an improvement or prohibition notice or determination made under any workplace, occupational health and safety or similar legislation.
Lot Owner’s Improvements
This covers Damage to Lot Owners Improvements (i.e. new fixtures or upgraded fixtures to a unit) that are not otherwise covered in Section 1.
This section provides cover for employees and is subject to the relevant workers’ compensation legislation in the State or Territory where the employees are based.
Note: Some circumstances make workers’ compensation insurance compulsory if you have employees
Who can help?
An insurance broker's role is to act as your representative and work in your interests, seeking the best cover at the best price for you with their skill, market knowledge and experience. Call a good one.
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