All strata properties are covered by body corporate insurance – in fact, insurance is a compulsory part of any body corporate scheme in Queensland. You pay strata insurance as part of your strata fees. Body corporate insurance provides cover for the whole property and protects owners and their lots in the event of either wilful or accidental damage. Strata insurance will pay for the reinstatement or replacement of the building in the event of a disaster, as well as other related costs, and is a legal duty of all strata schemes.
But it’s a common mistake to think that body corporate insurance is all you need when you buy a strata property (you can discover more wrong beliefs about body corporate insurance here.). Far from it – strata insurance is only one part of the equation. Strata owners will also need to take out their own contents insurance, and landlord insurance if they are renting the property. Here’s what you need to know.
What body corporate insurance covers
Body corporate insurance is a crucial part of any scheme, and will apply to:
- Every building that contains a lot
- All body corporate assets, including fixtures and improvements
- The common property and the contents of common areas
- Public risk while on the property
So, in concrete terms, body corporate insurance will cover the following types of items:
- Common walls between lots, doors and windows
- Fences and external awnings
- Swimming pools
- Ducted air conditioning servicing more than one lot
- Satellite dishes
- Outbuildings on common property
- External signs
- Underground services
- Baths, toilets, shower screens, sinks and basins
- Ovens and cooktops
- Built-in cupboards and fixed tiling
These items are considered part of the common property rather than part of any individual lot property, and that’s where the line is drawn. Strata insurance will only cover these aspects of common property and body corporate assets, but excludes the contents of individual units. Body corporate insurance does not cover the contents of your home – that kind of insurance cover is something you’ll have to take out yourself.
You’ll need your own individual contents insurance plan for all the contents of your home, including:
- Furniture and fittings
- Air conditioning
- Household appliances
- Light fittings
- Curtains or blinds
- Personal valuables, possessions and equipment
Basically, anything that is not permanently attached to your building will need to be separately insured from the body corporate insurance.
What is contents insurance?
Contents insurance is just what it sounds like – it is designed to protect your personal belongings from insurable events such as natural disasters, accidental damage or wilful damage (such as thefts). Just as any homeowner of a freestanding property would need to take out contents insurance to protect their possessions, so too do strata owners. Of course, contents insurance in strata (or anywhere) is not compulsory, but it’s a wise idea to ensure you have some cover in case the worst happens. You can tailor your insurance cover based on the value of your possessions and exactly how you want to insure them, and each policy has different things that it includes and excludes and different cover options available. Contents insurance gives you peace of mind that your treasured possessions are covered for what they’re worth and are protected from loss or damage.
Contents insurance also automatically includes liability cover for owners, as the body corporate policy only covers the body corporate’s liability, or duty of care. Owners need their own liability insurance to cover their own personal duty of care. The body corporate is not responsible for maintaining anything inside the exclusive use areas of a unit. Plus, if an owner is negligent on common property (for instance, if they leave a pile of mulch purchased for their own personal garden bed on common property and someone falls over it in the dark while making their way to their own unit), this will be a personal liability, not a body corporate liability.
What about landlord insurance?
Landlord insurance only applies to strata owners who rent out their properties, i.e., who are landlords. Your building’s general strata insurance policy won’t cover you for events rising out of a rental situation – and it won’t cover the tenants either. You’ll need to purchase landlord insurance as a separate policy, which will then provide insurance protection for your liability as a landlord.
Landlord insurance works in tandem with contents insurance and strata insurance to ensure that all aspects of a landlord’s property are properly covered. It will cover the contents of the property owned by the landlord and the landlord’s personal liability, as well as loss of rent due to an insured peril. Specifically, landlord insurance covers:
- The landlord’s contents from theft by the tenants or their guests
- Vandalism or malicious damage by the tenants or their guests
- Accidental damage by the tenants or their guests
- Loss of rental income if the tenant can’t or won’t pay their rent
- Any legal expenses made necessary by having to evict a tenant
- Depending on the policy (as not all policies cover this), damage to the property by natural disaster if this isn’t covered by your body corporate insurance plan
- The landlord’s personal duty of care to provide a safe and well-maintained unit
The tenants themselves are not covered by any of these types of insurance, but will need to arrange their own separate contents insurance as well to ensure their belongings are protected.
So, body corporate insurance generally covers the more permanent aspects of your building, while your individual contents insurance covers the more temporary aspects that can be removed. You need to take out individual landlord and contents insurance because they are not covered by your regular strata insurance policy. As with anything, it’s important to understand exactly what your contents and/or landlord insurance covers. Some policies may not cover certain leasing arrangements, or damage caused by pets, for example. Check with your insurance provider before taking out this type of insurance to make sure you are covered in every way you need to be. And contact us here at Capitol if you have any pressing questions about body corporate insurance.
Have a look at a detailed body corporate insurance guide here.