Residential Strata Insurance

Quick answerWhat does residential strata insurance cover?Residential strata insurance usually covers the building and common property for a body corporate or owners corporation, from duplexes and townhouses to apartment buildings. It also covers scheme-level liability and other risks. It does not replace each owner's contents or landlord cover, and an inadequate building sum insured can leave owners funding the shortfall.

Call 07 3292 1111 Have a broker call me

We review the scheme's wording and the building sum insured before we recommend a policy.

If you are insuring a home or a car rather than a business, start here instead.

One policy protects the scheme. The traps: an outdated rebuilding sum, optional cover nobody selected, and thinking it replaces each owner's own cover.

Who this page is for

Most Australian strata schemes, residential and commercial together, are small. Australasian Strata Insights 2024 reported that 68 per cent have five lots or fewer. We arrange cover for self-managed duplexes and townhouse schemes as well as larger apartment buildings and new developments. We currently arrange residential strata cover in Queensland, New South Wales, Victoria, South Australia and Western Australia.

If the scheme is commercial or mixed-use, see our commercial strata insurance page instead.

What residential strata insurance covers

At its core, residential strata insurance covers the building and common property, up to the building sum insured, plus public liability for the scheme at the limit your schedule sets. Depending on the wording and the options selected, it can also include:

office bearers liability for committee members;
fidelity cover for theft or misuse of scheme money;
machinery and equipment breakdown;
catastrophe cover, which switches on only after a formal declaration (depending on the wording, an insurance industry catastrophe declaration or a government state of emergency), not after any large claim;
loss of rent and temporary accommodation;
government audit costs; and
legal defence costs.

We compared the eight residential strata wordings we place. All contain these protections in some form, but not all are automatic. Some must be selected and can carry their own limits, conditions or excesses. Our guide explains the differences.

The building sum insured is the number that matters most

The building should be insured for what it would cost to rebuild, not what the units would sell for.

Across the eight residential strata wordings we place, we have not found an average or co-insurance clause that reduces a partial claim simply because the building was underinsured. Commercial building policies commonly do: see the co-insurance clause explained. That does not make underinsurance harmless. A partial loss is still limited by the policy sum insured and other policy limits. In a total loss, once the sum insured is exhausted, the owners have to fund the remaining rebuild cost, commonly through a special levy.

Two wordings also apply an adequacy test to their catastrophe benefit, so a low sum insured can affect more than the main building claim.

Indexation is not a substitute for getting the starting figure right. If the building was already underinsured, adding a percentage each year can simply carry the shortfall forward.

We can commission a desktop building replacement valuation at no cost to you, for our purposes as your broker, to inform the advice we give you. It gives us another way to test whether the number on the policy is realistic. It does not replace an independent valuation where your state's law requires one.

Excesses, optional cover and what is not covered

The ordinary excess sits on the schedule, but some events or optional sections can carry a different excess, and some add a second one on top. Flood cover can be requested, and most of the insurers we place with will consider it. On one of the wordings we place flood is included unless the schedule says otherwise, on five it is optional, and on two it cannot be bought at all. And all eight set a value for building work above which cover changes: on most you need the insurer's written consent before work starts, and on some, above that value, part of the cover simply stops.

On some wordings, lot owners' fixtures and improvements are paid only once the building sum insured is exhausted, and only if under three years old. Lift breakdown cover can hinge on a current maintenance agreement. We check both before placing.

Common exclusions include wear and tear, gradual deterioration, the cost of fixing a building defect, vermin, pests, war and terrorism. That is why we compare the wording and schedule, not just the premium. Which wordings, and the figures: the guide.

How we arrange residential strata insurance

We start with the scheme rather than a quote screen: state and strata plan, self-managed or strata-managed, building sum insured, last valuation, claims, plant, major works and tenanted lots.

Which insurers we approach depends on the building, not a fixed order: the state, the building sum insured, the size of the scheme and how the lots are used. One of the wordings we place will not write a scheme insured for under $1.5 million. Then we compare wording, excesses, optional sections and premium.

We can also place the first strata policy for a new development and help test the starting rebuild sum before handover.

Who arranges the policy - and how they are paid

A scheme can arrange cover itself, through a strata manager or through a broker. A strata manager may receive commission on the cover they arrange. That does not make the policy unsuitable, but owners should know how the cover was arranged and how the arranger is paid. CIB charges a broker fee in addition to, or in place of, insurer commission. On some placements the insurer pays no commission: we charge a fee instead, disclosed in full, and no strata manager earns commission on those.

What does residential strata insurance cost?

We have not found a published national average. The premium changes with the building sum insured, location, construction, claims history, excess, flood or cyclone exposure, plant such as lifts, and the size and use of the scheme. A two-lot brick duplex is not comparable with a lift-serviced apartment building. The only way to know your number is a quote against your actual risk.

Common mistakes we see

Insuring for market value instead of rebuilding cost.
Relying on annual indexation when the original valuation was already short.
Starting major building work without checking the policy first. Consent asked for after the work has started is too late.

Common questions

Residential Strata Insurance: your questions answered

I own a unit. What do I still insure myself?

Your contents and the improvements you are responsible for. If the unit is rented out, residential landlord insurance is separate too. The strata policy protects the scheme; it does not replace each lot owner's own cover.

Our duplex is on a standard format plan. Do we need a body corporate building policy?

It depends on the plan format and the state. In Queensland, building format plans generally make the body corporate responsible for the building, while detached buildings on some standard format plans can sit differently. Both are explained on commercial strata insurance. We check the plan rather than assume.

Does the scheme need a new valuation every year?

Not because the policy wording says so. No wording we place makes a valuation a condition of cover, and some do not mention one at all. State law can impose separate requirements. In Queensland, where the body corporate must insure the building, an independent full replacement value valuation is required at least every five years.

I am a builder finishing a townhouse or apartment project. Can you arrange the first strata policy?

Yes. A builder is usually already using a broker for their construction insurance, is short on time, and wants somebody to go to market on their behalf. We can place the first strata policy as the scheme is established, compare the market, and commission a desktop building replacement valuation to help test the starting sum insured.

Where to go next

Is your strata building insured for enough to rebuild it?

Send us the current certificate of currency and, if you have it, the last building valuation. We will review the sum insured and the wording and explain the gaps in plain English. No cost and no obligation. Send a new enquiry and we'll get back to you within 90 minutes during business hours.

Call now, most enquiries are settled in one conversation.