Insurance

What insurance must the Owners Corporation take out?

The Owners Corporation is required by law to have the following insurances with an approved Insurer:

Building & Common Property Insurance

A damage policy for the reinstatement or replacement value including removal of debris, architects and other professional fees to return the building back to the same condition it was in when new if destroyed or damaged by a contingency covered by “Strata”, “Industrial Special Risks”, “Fire & Defined Events” or other similar insurance policy. The building must be valued every five years and insured for at least that value. Beaumont Strata will organise for a valuation if so directed by the Owners Corporation at an annual general meeting.

“Building” includes fixtures and fittings in common areas such as light fittings, toilet bowls, common air conditioning systems, intercom system, carpet in common areas, common fire services, irrigation systems.

“Common Property” is all the areas not included in a lot and is generally formed by the upper surface of the floor, the under surface of the ceilings, all external boundary walls including doors and windows.

Everything within the air space of a lot must be maintained at the Owner’s cost.

An “Investor Owner” is responsible for damage to Contents, Removable Fixtures, carpet, paint, wallpaper, other temporary wall, floor and ceiling coverings within a lot along with breakdown to air conditioning and other domestic motors.

For convenience, most Owners Corporations insure under the Building policy the investor owners ”Loss of Rent Receivable” or “Rentable Value” following damage at the premises.

Public Liability Insurance

Legal liability against claims for damage to property, death or injury for which the Owners Corporation could become responsible for a minimum amount of $10,000,000.

Voluntary Workers – Personal Accident Insurance

Workers Compensation

The Owners Corporation is required to have Workers Compensation Insurance, as liability may exist under The Workers Compensation Act for Contractors or Other Persons who are “deemed workers” arising out of work performed on Common Property in the Strata Scheme.

 

What additional insurance may the Owners Corporation take out?

Fidelity Insurance

Loss of money, negotiable instruments or property of the Owners Corporation caused by fraud or dishonesty of an identified Committee Member.

Office Bearers Liability Insurance

Liability of a Committee Member for loss arising out of a “wrongful act” notified during the period of insurance. (Claims made policy)

Machinery Breakdown Insurance

Any sudden or unforeseen mechanical or electrical damage to machinery and plant that is part of the common property.

 

Can a mortgagee’s interest be noted on the Owners Corporation insurance policy?

A mortgagee’s interest cannot be noted under an Owners Corporation policy. An owner can arrange a policy to protect a mortgagee’s interest by a policy issued under Section 91 – Strata Management Act 1996 generally a Fire & Defined Events cover on the lot for the amount of the mortgage.

 

What insurance should an Investor/Owner consider taking out?

An Investor/Owner of a commercial or industrial strata unit can arrange insurance protection for damage to property such as paint, carpet, removable fixtures within a Lot that is not covered by the “Building” policy as well as public liability cover as property owner of a lot.

Public Liability cover as Owner of a lot.

In most cases Gross Rents Receivable are covered under a strata policy following Fire, Perils and Accidental Damage at the premises but, if they are not, insurance can be arranged.

 

What insurance should an Tenant (Occupant) consider taking out?

Fire, Perils and Accidental Damage to stock, contents and leasehold improvements

Business Interruption – Loss of gross profit and additional costs following interruption to the business from damage

Public Liability Insurance as occupiers

Workers Compensation

 

Does the strata manager receive any fee or commission for organising insurance?

Beaumont Strata has arrangements with various insurers/brokers under which we might receive a fee for introducing, organising and handling insurance matters.

The fee received by Beaumont Strata helps us to keep strata management charges as low as possible for owners. Basically, the fee received by Beaumont Strata is funded out of the commission that would have (or is) payable to the insurance broker. As a result, the policy premium is not increased by any fee received. We use our buying power to obtain the best deal for owners, providing a balance between coverage, price and security of underwriters.