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Owners corporations and the strata managers who act for them use strata insurance to protect the building and the common property, from a block of units to a mixed-use tower. In Victoria, most owners corporations are required by law to hold building insurance and public liability cover. Fortis Risk Solutions compares the building sum insured with a current valuation, checks the excess and how water damage between lots is handled, and arranges office bearers cover where the committee wants it. When a burst pipe or a lot owner’s claim comes in, we help the manager lodge it and follow it through. Bring the plan of subdivision and the latest valuation. Call 03 7046 3766 or send an enquiry.
What Strata Insurance Covers
Owners corporation insurance, usually called strata insurance, covers common property, shared assets and legal liability for strata-titled buildings and their owners corporations. It responds when damage or a liability claim hits the parts of the building nobody owns individually.
Cover extends to the building, common areas and shared facilities, plus liability cover for the owners corporation itself. It keeps the property funded for repair and the committee protected while it runs the scheme.
Whether the building is a residential apartment complex, a mixed-use development or commercial strata, strata insurance is the base cover for Australian strata communities. Each lot owner needs home and contents insurance. It sits within our personal insurance range at Fortis Risk Solutions.
Strata Insurance: Cover Sections and Benefits
What Victoria Requires of Owners Corporation Insurance
Consumer Affairs Victoria sets out the insurance an owners corporation must hold. Every owners corporation except a two-lot subdivision must take out reinstatement and replacement insurance for the buildings on the common property, and public liability insurance of not less than $20 million for the common property.
- On renewal, check that the building sum insured is more than the value of the buildings.
- A prescribed owners corporation must obtain a valuation every five years and present the valuer’s report at the next general meeting.
- Office bearers’ legal liability cover is optional. The owners corporation can take it out by ordinary resolution at a general meeting.
- If insurance cannot be obtained on reasonable terms, the owners corporation can apply to the Victorian Civil and Administrative Tribunal for an exemption.
FRS checks the current policy against each of these points before renewal. Source: Consumer Affairs Victoria, owners corporation insurance.
What Strata Insurance does not cover
Strata insurance covers the building and the common property. It stops at the boundary of the lot, and it stops at damage that has been building up for years. Typical exclusions are:
- Lot owner contents, carpets, curtains, light fittings and appliances, depending on how the plan defines the lot
- Gradual deterioration, rust, concrete cancer and rot in the common property
- Defective building work and design faults, which usually sit with the builder rather than the policy
- Water entry through failed waterproofing or a balcony that was never maintained
- Damage caused deliberately by an owner or their tenant
- Loss of rent for an individual lot, which belongs on a landlord policy
- Breakdown of lifts, pumps and pool plant unless the machinery extension is taken
FRS reads the plan of subdivision and the owners corporation rules with the committee, so the split between the policy and each lot owner is agreed before a claim tests it.
How Strata Insurance premiums are set
The building valuation drives strata insurance more than any other input. Insurers want a current reinstatement figure prepared by a valuer, then price the rest of the risk around it. What matters:
- The declared reinstatement value, including demolition, professional fees and the cost of meeting current building codes
- Height, construction type and the age of the building
- Cladding, including any combustible material identified in an audit
- The mix of occupants: owner occupied, long term rentals or short stay letting
- Claims history for the plan, particularly repeat water damage
- Fire protection, sprinklers, security access and lift maintenance
- The limits taken for office bearers liability, public liability and loss of common area rent
Committees often carry an old valuation for years and then find the sum insured falls short. FRS asks for a current one and puts the improvements to the market before renewal.
How to claim on Strata Insurance
A strata insurance claim involves more people than a domestic loss, so the record matters. Report early and keep the committee informed at each step. The FRS process:
- Notify: Notify FRS or your strata manager as soon as damage is reported, even if the source is still unknown
- Make safe: Make the common property safe and stop further water entry where that can be done safely
- Photograph and keep reports: Photograph the damage and keep any plumber or trade report that identifies the cause
- Report: Report theft, vandalism or malicious damage to police and record the number
- Do not admit liability: Do not admit responsibility to an affected owner before the cause is established
- We lodge and manage: FRS lodges the claim, coordinates the assessor with the manager and reports back to the committee
Owners and managers can start the process on our make a claim page.
Strata Insurance compared with lot owner Contents Insurance
| Question | Strata Insurance | Lot Owner Contents |
|---|---|---|
| What it covers | The building, common property and owners corporation liability | Furniture, appliances and personal belongings inside the lot |
| Who buys it | The owners corporation, funded by levies | Each owner or tenant, individually |
| Typical trigger | Fire, storm or a burst pipe in common property | Burglary, or water damage to your own goods |
| Sits with | Office bearers liability and machinery breakdown | Landlord cover where the lot is rented out |
Owners often assume the levy covers everything inside the apartment. It rarely does. A separate contents policy, or home and contents insurance written for a unit, fills the gap between the plan and the front door.
Strata Insurance - Client Case Studies
Cases from the Fortis Risk Solutions broking team. Client names have been removed.
Client case: Success Story: Commercial Strata Renewal
The client situation: A commercial strata property, 1 km from the Melbourne CBD, with a building sum insured close to the $10 million mark. We were approached by the property owner after they received a premium increase of nearly 25% on their renewal terms.
How we handled the case: By talking with the owner and the property manager, through a thorough know your client (KYC) and needs analysis process, we found that the occupations of 3 of the 9 commercial tenants had not been updated with the holding insurer. This caused an unnecessary premium increase and limited the insurer options.
We prepared detailed client file notes, obtained the most up to date and accurate information, approached more than 15 insurers and underwriters, and negotiated renewal terms on the insured’s behalf after obtaining a Letter of Authority to quote.Claim result: Instead of a significant premium increase, we secured renewal terms with broader coverage at a cost $8,985 less than the previous year.
How Fortis Risk Solutions helps: A renewal notice is not the only offer available. We check that the insurer holds the right information and take the risk to the wider market.
Every policy is different and the outcome of a claim depends on its terms. As your broker, Fortis Risk Solutions compares insurers and policy wording before you buy, and lodges and manages the claim for you when something happens. Talk to us about your own cover.
Strata Insurance FAQs
Yes. State and territory strata legislation generally makes it mandatory.
It covers common property and shared structures. Each lot owner insures their own contents and internal improvements, unless the strata plan says otherwise.
No. Lot owners arrange their own contents or landlord cover.
Yes. Regular replacement cost valuations keep the sum insured accurate, which is what avoids underinsurance and legislative non-compliance.
Strata policies vary widely in valuation method, exclusions and claims handling. As your broker, FRS helps you:
- Arrange compliant building replacement valuations
- Structure liability and catastrophe limits that match the building
- Compare strata wordings beyond price
- Manage complex claims and coordinate owners, managers and insurers
Lot owners who rent out their apartment need landlord insurance on top. Buildings with shops or offices at ground level also raise commercial property owner insurance questions.
An owners corporation should start with the building valuation, since a sum insured based on an out-of-date figure can leave every owner short after a major loss. Compare the office bearers' liability and fidelity sections, which protect the committee and the building's funds. Lot owners should know what the strata policy leaves to them, such as contents and, for investors, rent default under landlord insurance. We compare strata wordings for owners corporations and their managers.
Related reading
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Related industry pages: Hotel and Hospitality Property Insurance, Loss of Rent Insurance, Property and Real Estate Insurance
Talk to a broker about Strata Insurance
Call 03 7046 3766 on weekdays between 9:30am and 6pm, email admin@fortisrisksolutions.com.au, or send an enquiry and a broker from our Box Hill or Hawthorn office will come back to you about strata insurance. Tell us what the business does and what the lease or contract asks for, and we take it from there.