Commercial Strata Insurance for Schemes and Lot Owners

Commercial strata insurance is insurance for strata-titled property used for business: shops, offices, medical rooms, warehouses, industrial units and mixed-use buildings. In Queensland, it is also called commercial body corporate insurance.

There are usually two insurance jobs, and sometimes three:

A body corporate policy can be correctly arranged and a lot owner can still have a large uninsured exposure inside the lot.

Fit-out and improvements

Commercial fit-outs can include partitions, cabinetry, kitchens, cool rooms, signage, mezzanines, stairs, floor coverings and improvements purchased with the lot that were not part of the original building.

Some strata policies include cover for lot-owner improvements, but on the wordings we place that extension only switches on once the building's own sum insured has run out, which in practice means only the largest losses. Strata wordings also commonly exclude air conditioning serving a single lot, and temporary floor, wall and ceiling coverings. We check the wording and insure the balance.

Plant serving one lot

Plant can sit on common property and still serve only one tenancy. Air conditioning is the classic example. Whether the strata policy covers it depends on the policy and the installation. The lease may also make the tenant responsible for servicing while the owner remains responsible for capital replacement. Capital failure is yours: see Equipment Breakdown Insurance.

Your own liability

The body corporate's liability cover is written for the body corporate and the common property; some wordings give lot owners limited protection as owners, but none replaces your own liability cover. Property Owners Liability sets out the strata liability gap in full.

Loss of rent

On the wordings we place, a strata scheme's policy carries a capped loss of rent benefit for lot owners: a set limit, usually a percentage of the building sum insured, commonly paid until the lot is re-let after an insured loss. If your rent is worth more than that cap, the gap is yours to insure under your own landlord cover.

Lifting the cap is the insurer's call on that risk, not something chosen at renewal.

A lot owner may not control the scheme's building sum insured, but they can still end up paying for a shortfall.

If the insurance money is not enough to complete reinstatement, the body corporate still has to fund the difference. That can mean extra contributions, a special levy or borrowing, levied in proportion to lot entitlement. Not the owner who blocked the revaluation. Everyone.

Two sums insured are in play, and one never fixes the other. At scheme level a loss is paid in full up to the sum insured; the levied gap bites when that is not enough to finish the rebuild, immediately in a total loss and partway through the job in a large partial loss. Your own fit-out and loss-of-rent covers have their own sums insured, with the same logic.

Non-residential building construction costs across Australia rose 4.4 per cent in the year to June 2026, and about 40 per cent since 2018 (Australian Bureau of Statistics Producer Price Indexes, construction, released 31/07/2026).

Insurers often index sums insured between formal valuations, but indexation is not the same as checking the building properly. We recently reviewed a valuation that had omitted GST, leaving the replacement figure about $250,000 short. The valuation existed. The number was still wrong.

1. Assuming the body corporate policy covers everything inside the lot.
2. Never checking the scheme's building sum insured or last valuation date.
3. Leasing the lot without enough loss-of-rent cover for a realistic repair and re-let period.
4. Forgetting to tell the insurer when the occupation, vacancy or tenant mix changes.
5. Assuming the body corporate must always pay the claim excess. No strata wording sets it out. Responsibility can depend on the scheme, the cause of damage, maintenance obligations and body corporate resolutions.