Strata Property Management brings along a set of duties that include taking care of the building’s insurance. Whether you are from an owner’s corporation, a member of a strata committee or simply an investor in an investment property, you must understand Strata Insurance.
Many property owners tend to assume that their building has all the necessary coverage without even having a look at what their insurance covers. Mistakes in such cases could be quite expensive when it comes to filing a claim.
Here, we will take a look at some of the most frequent mistakes Australian property owners make regarding Strata Insurance and how they could be avoided.
Assuming Strata Insurance Covers Everything
One of the biggest misconceptions is believing that strata insurance provides complete protection for every type of loss.
While strata insurance generally covers:
- ● The building structure
- ● Common property
- ● Shared facilities
- ● Public liability
- ● Some legal expenses
It does not usually cover:
- ● Personal belongings inside individual units
- ● Tenant contents
- ● Loss of rental income (unless specifically included)
- ● General wear and tear
- ● Maintenance-related issues
Unit owners often need their own contents or landlord insurance to complement the strata policy.
Tip: Always read the Product Disclosure Statement (PDS) to understand what is included and excluded.
Choosing the Cheapest Policy Instead of the Best Cover
It’s natural to compare premiums, but selecting a policy based solely on price can become expensive in the long run.
Lower-cost policies may include:
- ● Lower coverage limits
- ● Higher excesses
- ● More exclusions
- ● Limited accidental damage cover
- ● Restricted catastrophe benefits
The cheapest premium may leave your owners corporation financially exposed after a major event.
Instead of focusing only on price, compare:
- ● Policy benefits
- ● Coverage limits
- ● Exclusions
- ● Claims process
- ● Insurer reputation
- ● Additional benefits
A slightly higher premium can provide substantially better protection.
Underinsuring the Building
Building replacement costs continue to rise across Australia due to increasing construction costs, labour shortages and material price inflation.
Many strata properties remain insured based on outdated replacement values.
If the building is underinsured, owners may have to contribute additional funds to cover rebuilding costs after a major event.
Building valuations should include:
- ● Demolition costs
- ● Professional fees
- ● Debris removal
- ● Compliance with updated building regulations
- ● Inflation in construction costs
Professional building valuations every few years help ensure adequate coverage.
Ignoring Policy Exclusions
Many owners only discover policy exclusions after lodging a claim.
Common exclusions include:
- ● Gradual deterioration
- ● Rust and corrosion
- ● Poor maintenance
- ● Mould resulting from neglect
- ● Pest damage
- ● Illegal activities
- ● Certain flood events (depending on the insurer)
Understanding exclusions is just as important as understanding what’s covered.
Review the policy annually and ask your insurance broker to explain any exclusions that could affect your property.
Failing to Update the Policy After Renovations
Property improvements can significantly increase rebuilding costs.
Examples include:
- ● New roofing
- ● Lift installations
- ● Solar panels
- ● Security systems
- ● Common area renovations
- ● Swimming pool upgrades
- ● External cladding replacement
If these improvements aren’t disclosed, your insurance may no longer reflect the property’s true value.
Always notify your insurer after major upgrades or renovations.
Not Reviewing Insurance Every Year
Many owners corporations simply renew their insurance without reviewing whether the policy still suits their needs.
However, circumstances change every year.
Review areas such as:
- ● Building valuation
- ● New risks
- ● Changes in occupancy
- ● Claims history
- ● Legislative updates
- ● Premium comparisons
- ● Coverage enhancements
Annual policy reviews can identify gaps before they become costly problems.
Overlooking Public Liability Cover
Strata insurance generally includes public liability insurance, but some owners underestimate its importance.
If someone is injured on common property due to:
- ● Slippery walkways
- ● Falling roof tiles
- ● Broken handrails
- ● Lift accidents
- ● Unsafe pathways
the owners corporation may be legally responsible.
Legal costs and compensation claims can easily reach hundreds of thousands of dollars.
Ensure the liability limit is appropriate for your building and its level of public exposure.
Not Keeping Proper Maintenance Records
Insurance is designed to cover sudden and unforeseen events not ongoing maintenance issues.
If insurers determine damage occurred because routine maintenance was ignored, claims may be reduced or denied.
Examples include:
- ● Roof leaks left unrepaired
- ● Blocked gutters
- ● Water ingress from neglected seals
- ● Cracked walls ignored for years
Maintain detailed records of:
- ● Building inspections
- ● Repairs
- ● Maintenance schedules
- ● Contractor invoices
Good documentation supports successful claims.
Delaying Insurance Claims
Waiting too long to report damage can create complications.
After an incident:
- ● Document the damage immediately.
- ● Take photographs.
- ● Prevent further damage where safe.
- ● Notify your insurer or broker promptly.
- ● Keep all repair invoices.
Quick reporting allows insurers to investigate while evidence is still available and helps speed up the claims process.
Trying to Manage Complex Insurance Without Professional Advice
Strata insurance can become complex, especially for:
- ● Large apartment complexes
- ● Mixed-use developments
- ● Commercial strata properties
- ● Heritage buildings
- ● Multi-building communities
Every property has different risks.
Working with an experienced insurance broker provides several advantages:
- ● Policy comparison
- ● Risk assessment
- ● Claims assistance
- ● Coverage recommendations
- ● Annual reviews
- ● Advice tailored to Australian strata legislation
Professional guidance often prevents expensive insurance mistakes.
Additional Tips for Property Owners
To maximise the value of your strata insurance:
- ● Review your policy annually.
- ● Obtain updated building valuations regularly.
- ● Understand all exclusions and limits.
- ● Keep maintenance records organised.
- ● Inform your insurer of renovations or major changes.
- ● Compare policies based on coverage—not just premium.
- ● Work with an experienced strata insurance broker.
Taking these proactive steps helps ensure your building remains adequately protected against unexpected events.
Why Choosing the Right Insurance Matters
It is important for everyone who owns the strata because such properties are an important investment. The badly designed insurance will lead to additional expenses, disputes between the owners, and recovery time from the natural calamities.
The proper strata insurance policy needs to give you peace of mind and security that your property is insured against many different kinds of risks.
Instead of considering the process of buying insurance an annual formality, think about it as an integral part of your property’s risk management strategy.
Conclusion
By not making common errors in insuring their strata properties, people in Australia can be able to save huge amounts of money and avoid stress in the face of unforeseen events. It could be as simple as making sure that your property is properly covered, knowing what is excluded from coverage, having your coverage renewed following renovation work, or getting advice from professionals.
As you prepare to renew your strata insurance cover in the near future, take some time to look at what you have currently. The help of a professional insurance broker can assist you in analyzing various insurance policies and make sure that you have adequate protection for your strata property.