Owners Corporation Insurance
Is my unit covered by Owners Corporation insurance?
The plan of subdivision should always be consulted to categorically determine as well as consulting with your relevant broker or insurance underwriter. In general terms, the structure of the unit itself and its fixtures will be covered, but not the unit’s contents/chattels or an individual unit's public liability. It is recommended that owner residents take out contents insurance and investors take out landlord's insurance.
Please note the following definition of fixture vs. chattel.
Fixture: Item is part of the land or structure and has been installed. As an example, a mirror that has been glued to a wall. Removal of such item would require repair work. This fixture would therefore generally be covered by Owners Corporation insurance.
Chattel: Item is personal property and moveable, as an example a mirror that has been hung on hooks. Item would be covered by unit owner's contents insurance. Please note that most insurance policies define blinds, carpet and light fittings as chattels.
If a fixture is installed for the benefit of one unit owner exclusively or if the Owners Corporation's consent was not obtained, that fixture may not be covered by insurance. Check the policy guide of your Owners Corporation insurance to learn more about items that may or may not be covered and cross-reference it with your private contents insurer to ensure that you are covered.
What other insurance do I need to take out?
Landlord Insurance
Landlords insurance is insurance cover for strata property owners who are renting out a unit/apartment to tenants. It is important as it provides cover for accidental loss or damage to contents in your unit from events such as fire, flood or storms. It covers items such as carpets, light fittings, curtains, blinds and washing machines as well as loss of rent if the unit is unfit to be occupied. Additionally, it covers you and your investment property for malicious damage to contents/buildings caused by tenants and/or their guests. It may also cover you if your tenant fails to pay rent. Insurance cover can include Contents, Loss of Rent, Tenant Default, Legal Expenses, Liability, Professional Costs, and Audit Costs.
Contents Insurance
Contents insurance is insurance cover for household and personal possessions such as clothing, jewellery, furniture, TV, computers, internal carpets, blinds and electrical appliances belonging to yourself and your family. Insurance cover usually includes Contents/Chattels only. Building Insurance
The Owners Corporation takes out one insurance policy that covers full replacement for all the buildings and adequate public liability insurance for the common property. Owners Corporation insurance must be taken out to cover the buildings legal liability.
Building insurance does not include the land value but includes architect fees and removal of debris. The building itself is deemed to include all fixtures. This value should be determined by a property valuation at least every 5 years to determine the replacement value of the property. A desktop valuation may also be used in the interim to value the building.
Additional add-on policy items for a typical strata property include:
Common Area Contents
Government Audit Costs
Voluntary Workers
Machinery Breakdown
Office Bearers Legal Liability
Fidelity Guarantee
Catastrophe
How do I know what my Owners Corporation insurance policy actually covers?
An Owners Corporation insurance policy will be attached to the Notice of Meeting before your Annual General Meeting. New owners can also check their Contract of Sale or welcome pack from the Owners Corporation.
CHU owners corporation insurance clients can download a Certificate of Currency for their property or to download the CHU Product Disclosure Statement.
How do I make a claim?
If the claim involves private property and contents, then you should contact your insurer or broker. If the claim involves damage or loss to common property, the strata manager should be notified as soon as possible. Your strata manager will notify the insurer or broker and organise any required work on the common property.
In the case of damage or loss, it is best to:
To claim for an invoice for partial work performed on common property, a tax invoice must be provided to the strata manager stating:
- Clear company details and ABN,
- Name and address of person being invoiced
- Date of repairs
- Breakdown of costs
- Description of repairs, including statement of cause of damage or loss
- Reasonable costs or an assessor will be appointedv
- GST
Most policies will not cover property losses resulting from
- Wear and tear or deterioration
- Poor design
- Poor workmanship
- Subsidence
- Tree roots
- Terrorism
The Financial Services Reform Act requires strata managers, or those who provide a financial service and arrange insurance, to be an Authorised Representative or Distributor before they can provide any general or factual advice. A strata manager appointed as a 'Distributor' may organise insurance and provide factual information whereas an 'Authorised Representative' can also provide advice.