When the Body Corporate is registered as a Building Format Plan, they must hold insurance for the full replacement value of each building that contains a lot. If registered as a Standard Format Plan, the Body Corporate must insure each building to its full replacement value where a building on one lot has a common wall with a building on an adjoining lot. If there are no common walls and are free-standing, the lot owner is responsible for building insurance.
The Body Corporate is required to insure the common property, body corporate assets, public risk and every building which contains an owner’s lot. Depending how the Body Corporate is registered determines the responsibility of the Body Corporate and the lot Owners.
The body corporate must conduct an insurance replacement valuation at least once every five years to ensure that the insurances are adequate. Fluctuations in the market for building material or trades may see the building become underinsured and as such the Body Corporate can be liable for any shortfall if its insurances are inadequate, therefore an insurance replacement valuation may be considered more often than required.
What is covered by the Body Corporate insurance?
The building insurance will cover the full replacement value of the building structure including approved improvements and fixtures. Items that are typically covered include:
| Toilets, baths, basins, shower screens, sinks Ovens/Cooktops Ducted air conditioners that service more than one lot Benchtops Built-in cupboards Windows and doors Underground services | Fixed tiling Fences/Gates Swimming pools Satellite dishes/TV and other antennas Pergolas External awnings Elevators/escalators Closed in balconies |
What is NOT covered by the Body Corporate insurance?
It is highly recommended that a lot of owners and/or tenants hold their own insurance to provide cover where the Body Corporate insurance does not. Lot owners are responsible for items from the interior paint inwards (minus the items listed above), as the Body Corporate will not insure these items:
| Household appliances e.g. dishwashers Valuables and personal equipment Furniture Carpets/carpet underlay/floating floors Curtains/blinds | Light fittings Air conditioners/hot water systems that only service 1 lot Landlord insurance Loss of rent: tenant default |
Who is responsible for the excess?
Who pays the excess on an insurance claim depends on a number of things. For example, if the body corporate claims on its insurance because a lot has been damaged by water from a leak in that lot, the lot owner would normally pay the excess.
However, if the damage to the lot happened because the body corporate did not properly maintain the common property, it would be reasonable for the body corporate to pay the excess.
As a guide, if the event affects:
- only 1 lot—the owner should pay the excess unless the body corporate decides that it is unreasonable for them to do so
- 2 or more lots—the body corporate should pay the excess unless the body corporate decides it is reasonable for the excess to be paid by 1 or more of the affected lots
- 1 or more lots and the common property—the body corporate should pay the excess unless the body corporate decides it is reasonable for the excess to be paid by 1 or more of the affected lots.
Body corporate insurance can be difficult to navigate, if in doubt as to whether a claim should be lodged or not reach out to your Community Relationship Manager or Capitol Insurance Manager.
Are Body Corporate By-laws Enforceable?