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. It does not cover your fit-out. The scheme policy carries a capped loss of rent benefit. Rent above the cap is the owner's to insure. For commercial lot owners: ring us about your own cover.

If you own a commercial lot and want it insured, or you sit on the committee of a commercial scheme, our page on insuring a commercial strata lot or scheme sets out what the scheme covers, what stays with you and how we check both.

Written by William Paull, Co-Founder & Account Director · 10 min read · Reviewed by Mark McGuire, Account Manager · Reviewed 21/09/2026

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

Strata insurance vs building insurance: the simple difference

If you own a commercial building on one title, you normally arrange the building insurance yourself. You choose the insurer, set the building sum insured and control the policy. The covers that owner holds, for each kind of building, are on commercial property insurance.

If the property is divided into strata lots, the scheme has its own insurance responsibilities. In many strata schemes the body corporate or owners corporation insures the building and common property for all lot owners. But that is not true in every scheme, and the rules differ between states.

In Queensland, the plan format matters. Buildings in building format and volumetric format schemes are generally insured by the body corporate. Detached buildings on a standard format plan can be the lot owner's responsibility instead. Where standard-format buildings share a common wall, the body corporate has building insurance duties for those buildings. Your survey plan says which format you are in. The whole of this law, and what happens when the scheme's number falls short, sits on our commercial strata insurance page.

We check how the scheme is registered rather than guessing from the appearance of the property.

Strata insurance vs building insurance: the simple difference
Question	Standalone commercial building	Commercial strata lot
Who normally arranges building insurance?	The building owner.	Usually the body corporate or owners corporation, but the title and plan format can change this.
Who chooses the building sum insured?	The owner and their broker, usually with valuation input.	The scheme sets the building sum insured for the whole insured building.
What else does the owner need?	Liability, contents, rent and other property covers as relevant.	Fit-out, improvements, contents, liability and loss of rent can still sit with the lot owner.
Who controls a building claim?	The owner and their insurer.	The claim may involve the body corporate, strata manager, lot owner, property manager and insurer, depending on the loss and scheme.

Is strata insurance the same as building insurance?

Not exactly. They can both insure physical building damage, but a strata policy is broader than a normal building policy because it is written for a shared ownership structure. It can include the building, common property, common assets and public liability for the body corporate, with other sections and extensions depending on the insurer.

For a commercial owner, the practical difference is that the building cover is often arranged for the scheme as a whole. That still does not insure everything the lot owner owns or earns.

Do I need separate building insurance if I own a commercial strata lot?

Often, no. If the body corporate is required to insure the building, buying another building policy over the same structure is not the answer.

But do not turn that into a blanket rule. In Queensland, detached buildings on some standard format plans may be the lot owner's responsibility to insure. Other states have different legislation and title structures. We also see self-managed commercial schemes where owners do not have a strata manager guiding them through any of this.

Send us the documents you already have. We can check whether the building is insured by the scheme or needs to sit with you.

What does the strata policy cover, and what stays with the lot owner?

Three policies can be involved in one commercial strata property.

What does the strata policy cover, and what stays with the lot owner?
Exposure	Scheme or strata policy	Lot owner's policy	Tenant or operating business
Building and common property	Usually, where the scheme is responsible for the building.	Only where the title makes the building the lot owner's responsibility.	No.
Fit-out and improvements	May have a limited extension. On most of the wordings we place it pays only once the building's own sum insured has run out. On one it pays on any covered building claim, up to a set amount per lot.	Often the main policy for the owner's fit-out and improvements.	Can apply where the tenant owns the fit-out or the lease requires them to insure it.
Stock and business equipment	No.	Only if the owner owns it.	Usually insured by the operating business.
Plant serving one lot	Depends on the wording and installation.	Can sit with the lot owner.	Servicing obligations may sit with the tenant under the lease.
Loss of rent	A scheme policy may provide a capped benefit after an insured loss.	The rent the owner stands to lose is theirs to insure.	The tenant insures its own lost income through business interruption cover.
Liability	Public liability for the body corporate and common property.	Property owners liability for the owner.	The tenant or operating business needs its own liability cover.

This is the point most owners miss: paying towards the strata premium does not mean the scheme policy has insured everything you own inside the lot.

Where does the body corporate's cover stop?

The lot boundary matters, but it is not sensible to make a prospective client interpret survey plans and strata documents before they can ask for help. Call us and we will help work it out.

The items that cause the most confusion are commercial fit-out and plant.

A fit-out can include cabinetry, partitions, floor coverings, signage, kitchens, cool rooms, racking, mezzanines and stairs. You may also have bought improvements with the lot that were installed by an earlier owner and were never part of the original building.

Air conditioning is another trap. Equipment can sit on a roof or other common area but serve only one lot. Some strata wordings exclude air conditioning that serves an individual lot, while other installations can form part of the strata building cover. The physical location alone does not give you the answer.

We check the policy wording, the installation and the lease obligations together.

What is the difference between strata insurance and landlord insurance?

They protect different exposures.

The strata policy is primarily concerned with the scheme's insured property and 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. If you lease a commercial strata lot, your own landlord cover is about what you still own and the income you can lose: fit-out, property owners liability and the rent above the scheme's cap. See commercial landlords insurance.

The occupation still matters to the strata insurer. A shop becoming a restaurant, an office becoming a gym, or a lot becoming vacant can change the insurer's assessment and premium. In Queensland, an owner must give the body corporate details where the use of a lot is likely to increase the insurance premium.

The lease also matters. It can allocate responsibility for fit-out, glass, air conditioning, repairs and insurance between landlord and tenant. Do not assume the lease and the strata policy automatically line up.

Why loss of rent needs its own cover

A common mistake is to assume the strata policy will replace all rent after a building loss. 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.

A capped benefit is not the same as insuring your actual rent for the full time it could take to repair, refit and re-let a commercial tenancy.

The owner does not control every part of the building repair, particularly where the body corporate's insurer is involved. The commercial landlord insurance guide works the sizing through.

The scheme's sum insured can become every owner's problem

The scheme's building sum insured is not the market value of your lot. It is the amount available to reinstate the insured building after damage.

The valuation itself can also be wrong. Our strata team recently reviewed one that omitted GST, leaving the replacement figure about $250,000 short. If the scheme's number falls short, every owner can end up funding the gap. Our commercial strata insurance page sets out who pays when the scheme is insured for too little.

What happens when a strata claim crosses several policies?

Real damage does not stop at a strata boundary. A roof leak can damage common property, a landlord's fit-out and a tenant's stock in one event.

That can create separate claims with different insurers and excesses. More than one person can be involved in sorting out a claim: the committee, the strata manager, the lot owner and the insurer.

The excess is not automatically the body corporate's problem either. No strata wording sets it out. Responsibility can depend on the scheme, the cause of the damage, maintenance obligations and any resolution about how excesses are paid.

Wear and tear, gradual deterioration and the cost of correcting defects are commonly excluded. Those issues can affect whether the policy responds before anyone gets to the argument about who should pay an excess.

And if the scheme's sum insured 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. Where the clause applies and where it does not: the co-insurance clause explained.

What should I check before buying or renewing a commercial strata lot?

Keep it simple. We look for five things:

Who is responsible for the building insurance? We check the title and plan format rather than assuming.
What is the current building sum insured? It should be based on reinstatement cost, not the market value of the lots.
When was the last independent valuation? Also check whether GST, professional fees and other reinstatement costs were included.
When does the current strata policy expire? This matters before settlement and before a renewal gets left too late.
What do you still own or earn inside the lot? Fit-out, improvements, plant, liability and rent need their own review.

Every Queensland scheme must also hold public risk insurance over its common property of at least $10 million for a single event, whatever the plan format. $10 million is only the floor. $20 million has become the commonly recommended benchmark in strata.

If you are buying, your conveyancing solicitor can usually obtain the scheme documents. If you already own the lot, send us whatever you have and we can help identify what is missing rather than sending you away to interpret it yourself.

FAQ

If I own every lot in the scheme, do I still need strata insurance?

Owning every lot does not automatically remove the scheme or its insurance duties. If the strata title remains in place, check the scheme's obligations and your own lot-owner exposures rather than treating the property as a normal single-title building.

Is the strata building sum insured based on what my lot is worth?

No. Market value and rebuilding cost are different numbers. The scheme's sum insured is about reinstating the insured building. Insurers may index that figure each year, but regular valuation still matters.

Who insures the roof, lifts and car park?

The body corporate must insure the common property in every scheme. The difficult items are often plant that serves only one lot or improvements that sit in a shared area. We check the wording rather than relying on where the item happens to be located.

Does the same answer apply outside Queensland?

The general concept travels, but the legal details do not. The name of the scheme, minimum liability limits, valuation rules and responsibility for the building vary between states. A Queensland answer should not be copied into a New South Wales or Victorian scheme without checking it.

Can CIB help with mixed-use or residential strata?

Yes. Commercial and mixed-use strata are the focus of this page, and mixed-use building insurance sets out which policy covers which part of a shops-below-flats-above building. We also place residential strata. Every one of our account managers can, and it is a live product on the panel we use. We write it in Queensland, Victoria, New South Wales, South Australia and Western Australia, on both plan types.