Strata Insurance vs Building Insurance: Who Insures What in a Commercial Scheme

Quick answerStrata insurance is building insurance bought by a body corporate instead of one owner, so your title decides which you have, not you. The strata policy does not cover your fit-out, your liability inside your lot, or your rent. This page is for commercial lot owners. Ring us about your own cover.

Written by Mark McGuire, Account Manager · 10 min read · Reviewed by William Paull, Co-Founder & Account Director · Reviewed 16/09/2026

Written for commercial and mixed-use lots: a shop, a suite, an office lot, a strata warehouse or an industrial unit. If your lot is purely residential the split still holds and we can still place your cover: ring us, or read the residential question on our commercial strata insurance page.

Is strata insurance the same as building insurance?

Subdivide a building into lots and the structure is no longer one person's to insure. Lifts, car park, driveway and common stairs are held in common, and the law gives the body corporate the responsibility to insure them in every scheme. The structure usually goes the same way, though not always: whether your scheme has to insure the building depends on the plan your lots sit in. Check that first. We can do it for you.

Hold it by title, not by habit. A shed on one title under commercial building insurance and a strata warehouse unit on another is entirely normal, and nobody notices the mismatch until one has a claim.

It is still a scheme even if you own every lot, and even if nobody is running it. One person or one company can hold all the lots and the body corporate still exists with its own duties. Plenty of commercial schemes are self-managed: no strata manager, no meetings, nobody sending you anything. Our strata team sees both constantly, and they are the schemes where the insurance question goes unasked for years, often with the reverse gap: a strong policy over the building and nothing over the fit-out, rent and liability inside the lots.

Is building insurance included in my strata levies?

Quick answerBuilding insurance is usually inside your levies, which is why it is misread: the premium comes out of the scheme's money, and that money is what the lot owners put in. In some schemes there is no building cover in it at all.

The body corporate is the insured, not you and not the manager. A strata manager is an agent the body corporate hires, and where the scheme uses a broker that broker acts for the body corporate too. You contribute to that policy. You are not a party to it. What it insures belongs to everyone: the structure and the common property. Your fit-out is very unlikely to be in it, your stock certainly is not, and the rent you lose is not property at all.

The sum insured, the valuation date and the liability limit sit in the scheme's records, not in anything addressed to you. Ring 07 3292 1111 and we will ask the scheme for the certificate of currency and the valuation date ourselves.

Where does the body corporate's cover stop and yours start?

Quick answerThe body corporate's cover stops at the boundary of your lot. Everything on the common side of that line is theirs to insure and everything you own on your side is yours, so three policies can end up over one building. The boundary is a legal line on a survey plan, not the line you would guess.

Owners assume the line is the paint. Often it is not: the plan the scheme was registered under decides where it sits, so two lots can look identical from the doorway and have their boundaries in different places. Your fit-out reaches further than owners expect: shopfitting, cabinetry, partitioning, floor coverings, signage, the kitchen, the cool room, the racking, and any mezzanine you put in with the stairs up to it. The body corporate's liability cover answers only where the body corporate is legally liable, which is why defence costs run up before anyone decides whose fault it was.

The test is who the plant serves, not where it sits: plant serving the whole building is common property.

You can lodge a claim on the structure. You do not hold the pen on it: somebody else decides which builder does the work and how fast, while your tenant waits. That is the argument for sizing your own loss of rent generously, which commercial landlords insurance covers. Finding where a lot boundary legally falls is our job, not homework for you: ring 07 3292 1111.

What is the difference between landlord insurance and strata insurance on a commercial lot?

Quick answerLandlord cover and strata cover are not alternatives and you may need both. The strata policy insures the building for everybody in the scheme. Landlord cover on a commercial strata lot is not a building policy at all: it is your rent, your fit-out and your liability as the owner.

A warning about the words: in Australia "landlord insurance" usually means a residential rental property, which is not what a commercial lot owner needs. See commercial landlords insurance.

The strata policy insures the asset. What happens inside the building is a major rating factor, so the occupancy and any period the lot sits empty have to be disclosed to the insurer by the body corporate, through its manager or broker. If the scheme's insurer was never told, that shows up at claim time rather than at renewal.

Your own layer insures the arrangement you have made. A commercial body corporate policy does not include loss of rent. Where a scheme's policy reaches lost income at all, that benefit is capped and shared across every lot owner. Yours has to be sized to a repair timetable somebody else controls, which the commercial landlord insurance guide works through. The fit-out is its own argument: in retail strips the landlord often owns the fit-out the tenant is using, and the lease decides who insures it. And your tenant's public liability policy protects your tenant, not you.

What does the law actually require the body corporate to insure?

Quick answerThe body corporate must insure the common property in every scheme. Whether it must insure the building depends on how the scheme was subdivided: compulsory in a building format or volumetric format plan, optional where the buildings are detached on a standard format plan. Either way it must hold public liability of at least $10 million, and the rules split the same way under the Standard and Commercial Modules.

Your survey plan says which format you are in. Where the scheme must insure the building it must also get an independent valuation at least every five years. Compliance is not adequacy: the law tells the body corporate to get a valuation, not to get the right answer. The whole of this law, and what happens when the number falls short, sits on our commercial strata insurance page. Every rule here is Queensland law.

What happens at claim time when two policies are in play?

The damage crosses the line. Water through a common property roof destroys a lot owner's fit-out and a tenant's stock: one event, three victims, three policies. Somebody lodges the structural claim and you lodge yours. Neither of you is a party to the other, and unless somebody coordinates them they run on separate tracks.

There can be two excesses, and who carries them is a legal-liability question about whose duty to maintain the property failed, argued scheme by scheme. No strata wording sets it out. How excesses work is at insurance excess explained.

The wear-and-tear argument arrives. Buildings fail slowly and then suddenly, and the line between gradual deterioration and sudden damage is where strata claims are contested most often.

Then there is the sum insured. If the scheme's is short, the claim is not scaled down: none of the commercial strata wordings we place carries a co-insurance or average clause, so a loss is paid in full up to that sum insured. In a total loss the shortfall is immediate; in a large partial loss it shows up once the sum insured runs out partway through the job. Either way the body corporate is liable for the gap and levies every owner for it. Your own sum insured is a separate problem. Where the clause applies and where it does not: the co-insurance clause explained.

What should I check before I buy a commercial strata lot?

Six of these are questions somebody else has to answer. The seventh is yours alone. Run them again at every renewal.

1. Which plan format the scheme is registered under. It is on the survey plan. Get it in writing, with where your lot boundary sits.
2. The certificate of currency. Ask the manager or the committee; if you are buying, your solicitor gets it before settlement. A scheme that cannot produce it quickly has told you something.
3. The date of the last independent valuation. Not the policy date, the date behind the sum insured. Beyond three years it deserves a second look.
4. The building sum insured itself. Does it cover rebuilding this scheme today, including the cost of taking away debris, professional fees, GST and the time the job takes? Our strata team has seen a valuation come back short because GST was left out of it.
5. The public liability limit. Compare it to the current benchmark, not the legal minimum: see commercial strata insurance. Every Queensland scheme holds this one whatever the plan format.
6. What the scheme's wording says about lot owner improvements. Whether the extension only activates once the building's sum insured has run out, and what it excludes. That sentence decides whether your fit-out has cover behind it.
7. Your own policy. Fit-out at replacement cost today, not install cost. Loss of rent over a realistic rebuild period. Your own liability limit. Several lots across different structures is a portfolio review: see commercial property owners.

Rather have somebody read all seven with you? That is a phone call, not a project. Ring 07 3292 1111.

FAQ

My lot is in a mixed-use scheme with residences above the shops. Which rules apply?

The body corporate's core duties do not change with the mix. What changes is how the scheme is rated by insurers: a commercial kitchen, retail foot traffic and after-hours occupancy alongside private residences are a different risk from an office block. The premium does move when the mix changes, but only once the insurer is told, and in a self-managed scheme that is the conversation nobody has. Which policy covers which part of a shops-below-flats-above building is on mixed-use building insurance.

Is the scheme's sum insured meant to reflect what my lot is worth?

No, and it is a costly assumption. It is the cost of rebuilding the whole structure, tested against construction cost, not market value and not what individual lots sell for. Most scheme policies are indexed each year, but indexing only moves the figure it starts from: if the valuation behind it was short, every year carries that shortfall forward.

Does any of this change outside Queensland?

The broad split does not. The scheme insures the common property, it usually insures the building too, and the lot owner insures what is theirs. The detail does: minimum liability limits, how often a valuation is required, when the building is the scheme's responsibility to insure rather than the owner's, and what counts as common property are set state by state. Ask us before you carry a Queensland answer across a border.

Related reading

• Commercial strata insurance
• Commercial building insurance
• Property owners liability
• Mixed-use building insurance
• Commercial landlords insurance
• The commercial landlord guide
• Loss of rent insurance
• Underinsurance in commercial buildings
• Insurance terms glossary
• Underinsurance risk checker