If you live in a property managed by a body corporate, such as an apartment or a townhouse, you may be unsure how insurance works.
With strata insurance, also known as body corporate insurance, typically covering the building and common areas,1 you might wonder if you still need your own home insurance. The answer depends on your specific circumstances and the level of coverage provided by your body corporate’s insurance.
In this article, we’ll explain what body corporate insurance is and how it differs from home and contents insurance, and outline scenarios where additional coverage might be an option.
What is a body corporate?
A body corporate, also referred to as an owners corporation, is a legal entity that manages the common property of a strata-titled property, such as shared areas in an apartment complex or a townhouse development.2 This might include entry lobbies, lifts, gardens, swimming pools and parking areas. The body corporate is responsible for ensuring these areas are maintained and insured.3
What is body corporate insurance?
Body corporate insurance – typically included in body corporate fees and levies – is a policy that generally covers the building’s structure and shared areas. It may include public liability cover and protection against structural damage caused by natural events.1
“Strata or body corporate buildings are legally required to have a building insurance policy in place, covering all owners should the building be damaged or destroyed,” explains property lawyer Amanda Farmer from the Your Strata Property podcast.
“This policy extends to cover owners’ improvements and fixtures that form part of the building. So, generally speaking, kitchen and bathroom fixtures are covered by the body corporate’s insurance, as are built-in wardrobes and other cabinetry.”
Who funds body corporate insurance?
The cost of body corporate insurance – the premium – is typically shared between property owners in the body corporate fees,4 which are payable to the strata manager or body corporate.1
What body corporate insurance doesn’t cover
Body corporate insurance is unlikely to cover everything, particularly when it comes to your personal effects.
“The body corporate’s insurance does not cover your contents – that is, your personal (removable) belongings and furniture,” says Farmer.
For example, if you live in an apartment complex with ducted air conditioning, it would typically be classified as a body corporate asset and covered by strata insurance, whereas a mobile or fixed air-conditioning unit would not.5 Similarly, permanent fixtures such as internal walls, ceilings and skirting boards are generally covered by body corporate insurance but your carpets, blinds, light fittings and curtains fall under your personal responsibility.5
What is home and contents insurance?
Home and contents insurance may help to cushion you financially if your home and belongings are damaged by a storm, fire or other insured events.6
A home and contents policy will typically cover both the building itself and fixtures as well as personal belongings, whereas contents insurance will typically cover your personal belongings only.7
At Youi, if contents are insured in a strata title property that you own, contents also includes the fixtures and fittings that are not legally part of the building according to the relevant state or territory law.
For example, “this could include kitchen and bathroom units, floorboards, tiles, solar power systems, screens and external blinds,” says Mervyn Hartley, Youi’s Head of Product for Home Insurance and Small Business.
“For strata property owners, this could help bridge a gap if there are fixtures and fittings that aren't legally part of the building and therefore may not be covered by body corporate insurance.” says Hartley.
“This Contents policy for strata property owners won’t cover an accident that occurs in a common area of a strata title premises, or other areas for which a body corporate or building manager is responsible,” he says.
Body corporate insurance vs contents insurance
Here’s a quick comparison table to clarify the differences:
Body corporate insurance
| Contents insurance
|
When might a strata owner need additional insurance?
These scenarios illustrate when additional insurance might be helpful:
Scenario 1 – a water leak has damaged my belongings and furniture
“Depending on the cause of the leak, these items may not be covered by the body corporate or its insurance policy,” explains Farmer. “In this case, you may need to fall back on your contents insurance to avoid being out of pocket.”
Scenario 2 – my unit was burgled
If your apartment is broken into, body corporate insurance won’t cover stolen items such as laptops, jewellery or other personal possessions.1 Contents insurance may provide cover in this situation.8
Scenario 3 – we renovated our bathroom and now our shower is leaking
“When owners are given permission by the body corporate to renovate their apartment, that permission often comes with a condition that the owner also takes responsibility for future insurance,” says Farmer.
“So, a bathroom would usually be covered by a body corporate’s building insurance, but where that bathroom has been renovated, the responsibility to insure may shift to the owner. It’s important to check the building’s by-laws, or rules, to see if that type of responsibility may apply to you.”
Understanding your situation
Before you make any decision on insurance, Farmer advises checking your body corporate’s specific details and requirements.
“Make sure you understand precisely what the body corporate’s insurance covers,” says Farmer.
“You can obtain a copy of the body corporate’s insurance certificate of currency from your strata manager or the secretary of your building. Exclusions on the policy will be listed, and it’s important to check if any of those exclusions may leave you without adequate cover.”
Youi Contents insurance for strata-titled properties may cover specific gaps left by body corporate insurance.10 If you’d like to learn more about how this might apply to you, start a quote with Youi for insurance that’s a bit more you-shaped.
1 Source: Canstar – Body Corporate fees – what do they cover?, April 2024
2 Source: Canstar – What is a strata title and how does it work?, July 2024
3 Source: Qld Government – Role of the body corporate
4 Source: Qld Government – Insurance premium and excess
5 Source: Stratacare – Body Corporate Insurance: Factsheet, January 2024
6 Source: Qld Government – Insurance for your home
7 Source: Canstar – What is home insurance and what does it cover?, October 2023
8 Source: Moneysmart – Contents insurance
9 Source: Insurance Council of Australia – The benefits of contents insurance – protection for renters
10 See the Home insurance PDS for full details
