The owners corporation holds strata insurance over the building and common property, and every lot owner still needs their own contents insurance for what sits inside the lot. That is the whole of the strata insurance vs contents insurance question: one policy rebuilds the block, the other replaces your fit out, your belongings and your liability inside your own four walls. Owners who rely on the owners corporation policy alone are usually insured for the shell and nothing else.
What the owners corporation policy is required to do
In Victoria an owners corporation must insure the buildings on the plan for their reinstatement and replacement value and hold public liability cover for the common property. Consumer Affairs Victoria sets out those duties, along with the requirement to review the insured value and report it to owners. The policy is paid for through levies, so every lot owner is already contributing to it.
What it covers is the structure: external walls, the roof, common corridors, lifts, the car park, the pool, and the original building fabric inside each lot as it was when the plan was registered. What it does not cover is anything an owner has added since, or anything an owner can carry out the door.
Strata insurance vs contents insurance: where the boundary sits
The dividing line is the lot boundary, and it is less obvious than it sounds. A useful way to think about it: if you turned the apartment upside down and shook it, whatever fell out is contents. Most of what stays put is either building, insured by the owners corporation, or improvements you made, which frequently are not.
The grey zone is the fit out. Floor coverings, blinds and curtains, light fittings, built in wardrobes, a replaced kitchen, a new bathroom, an installed air conditioner: these often fall outside the owners corporation policy, either because the wording excludes lot improvements or because the block was insured on its original specification. Renovate an apartment and you can add a lot of value that nobody has told the strata insurer about.
What a lot owner should actually insure
- Household contents: furniture, appliances, clothing, electronics, tools, bicycles and anything stored in the car space or cage.
- Fit out and improvements you paid for, especially a renovated kitchen or bathroom, floor coverings and window furnishings.
- Personal legal liability for something that happens inside the lot, such as a visitor injured in your apartment.
- Temporary accommodation, so you have somewhere to live while a damaged building is repaired.
- The owners corporation excess, where the policy allows it, since a lot related claim can leave you paying that amount.
Moneysmart’s contents insurance guidance recommends working through the property room by room and listing what replacement would cost today. That exercise is what turns a guessed number into a defensible one, and it takes an hour.
The strata excess is a real exposure for lot owners
Owners corporation policies carry excesses that are set for a whole building, not for one apartment, and water damage excesses in particular can be substantial. Where a claim starts inside a lot, the owners corporation is often entitled to recover that excess from the owner responsible. A lot owner who has no contents policy and no cover for the strata excess can end up paying it out of pocket while also replacing their own belongings.
Ask the manager what the excess structure looks like before you assume it is somebody else’s problem. It is one of the few numbers in strata that a lot owner can plan for in advance.
Water damage is where the two policies meet
Most disputes in apartment blocks are water. A pipe fails in the wall between two lots, or a shower membrane leaks into the unit below. The building repair usually sits with the owners corporation policy, the damaged carpet, furniture and electronics sit with the affected owner’s contents policy, and the cause has to be established before either insurer moves. Holding your own policy means your side of that claim proceeds without waiting for the committee to decide anything.
If you have no contents policy, the money for your ruined floor and furniture has to come from somewhere else, usually a liability claim against whoever caused the leak. That is slower and it is not certain.
If you rent the apartment out
An investor’s needs shift. The tenant insures their own belongings, so what the owner is protecting is the fit out, the appliances supplied with the lot, loss of rent and liability inside the lot. That is a landlord insurance policy sized for a strata lot, not a house, and it should be written knowing the owners corporation already carries the building. Owner occupiers looking at how the same items are treated in a freestanding house can compare it with a standard home and contents policy.
What FRS does: we read the owners corporation certificate and the strata policy schedule before quoting, so the lot owner is not paying twice for building cover or leaving a hole where the strata wording stops. We size the fit out sum insured against what has actually been renovated, cover the strata excess where the insurer allows it, and manage the claim when a lot loss and a common property loss overlap.
If you own an apartment or sit on a committee, our strata insurance page explains what we review and how we place it.
Frequently asked questions
Do I need contents insurance if the strata is insured?
Yes. The owners corporation policy insures the building and common property, not your furniture, electronics, clothing or the fit out you installed. Without your own policy, a fire or a burst pipe leaves you with a repaired shell and nothing inside it. Contents cover for a lot is generally inexpensive.
Who insures a renovated kitchen in an apartment?
Usually the lot owner. Many owners corporation policies cover the building as originally constructed and exclude lot improvements, so a kitchen or bathroom you replaced falls to your own policy. Check the strata wording, then set your fit out sum insured to what the renovation would cost to redo today.
Does the owners corporation policy cover my liability?
Only for the common property. It responds when someone is injured in a corridor, lift or car park. An injury inside your lot, or damage you cause to another lot, sits with your own personal liability cover, which usually comes as part of a contents or landlord policy.
Who pays the excess on a strata claim?
It depends on the cause. Where the loss starts inside one lot, an owners corporation can often recover the excess from that lot owner, and the amounts on strata policies are not small. Some contents and landlord policies will pay it, so ask before you assume you are covered for it.
