Understanding Strata Schemes and Strata Insurance Responsibilities
Strata properties require the right insurance coverage to protect owners and residents from potential risks. Understanding the different types of strata schemes and their insurance requirements is essential to ensure owners are adequately protected.
CHU specialises in strata insurance and strata services. This includes a range of insurance options depending on the property owner’s circumstances and the unique needs of the strata scheme.
Types of strata schemes and insurance requirements
The Strata Titles Act 1985 (WA) recognises two main types of freehold strata schemes: strata schemes and survey-strata schemes. Each scheme has different property ownership structures, which impact insurance responsibilities.
Strata Schemes Strata plans are the original form of subdivision plan for a scheme, commonly known as built strata. At least one building must be shown on the strata plan. In a strata scheme:
Common property is part of the land subdivided by the scheme that does not form part of a lot and is not separately identified on the plan.
The strata company is responsible for insuring the building and common areas.
Residential and commercial strata insurance provide comprehensive coverage for buildings, common area contents, natural disaster damage, fire, accidental damage, and legal liabilities.
Owners should consider additional coverage for personal belongings through contents insurance.
Survey-Strata Schemes A survey-strata plan consists of three parts: the lots and common property, the records of interests and encumbrances, and the schedule of unit entitlements. In a survey-strata scheme:
Lot owners are responsible for insuring the buildings and infrastructure on their lots.
A community association may manage common property where shared land exists.
Community association insurance provides relevant coverage for common property areas.
Owners should ensure they have sufficient coverage to protect their homes against risks like fire, storm damage, and liability claims.
Single Tier Strata Schemes Single-tier strata schemes are strata schemes where no lot is above another lot. The floor of one lot cannot form part of the ceiling of another lot. Multi-storey apartment buildings do not fall under this category, but two-storey townhouses or villas can be part of a single-tier strata scheme.
Essential Strata Insurance
Whether part of a strata or survey-strata scheme, having the right insurance is crucial to mitigating risks. Key coverage options include:
Residential Strata Insurance: Covers the building, common areas and liability for residential strata schemes.
Commercial Strata Insurance: Designed for mixed-use or commercial properties, covering buildings, public liability, and business-related risks.
Landlord Insurance: Protects owners of investment property against accidental damage and loss cover for contents you provide for use by your tenant/s.
Contents Insurance: Essential for lot owners and tenants, covering personal belongings against theft, damage, and loss.
Why Accurate Building Valuations Matter
Ensuring buildings are insured for their true replacement value is critical. Underinsurance can lead to financial shortfalls in the event of a claim, which can lead to financial stress for owners and potential legal implications. Regular professional valuations help strata companies determine adequate coverage.
Just as proactive maintenance reduces risks, having the right insurance in place helps mitigate financial exposure. Owners and strata managers should:
Engage a professional to obtain a valuation of their property to ensure they are adequately insured.
Regularly review insurance policies to ensure they align with the scheme’s needs.
Address building defects and maintenance issues to maintain resilience of the building and protect against damage escalating due to poor maintenance or defects.
Work with your strata manager and insurance broker to tailor coverage that meets specific strata requirements.
CHU: Your Strata Insurance Partner
CHU specialises in strata and is the largest strata insurance provider in Australia. CHU offers market leading insurance and strata services designed to protect strata properties and help owners mitigate risks. CHU’s expertise ensures strata schemes are protected and prepared for unexpected or foreseen events.
Contact CHU to learn more about our strata insurance products and services that support strata managers, owners, and committees in protecting their properties.
Reference: Landgate –https://www.landgate.wa.gov.au/siteassets/documents/strata-and-community-titles/strata-titles/strata-information-guides/guide_to_strata_titles.pdf
Disclaimer: CHU Underwriting Agencies Pty Ltd (ABN 18 001 580 070, AFS Licence No: 243261) acts under a binding authority as agent of the insurer QBE Insurance (Australia) Limited (ABN 78 003 191 035, AFS Licence No: 239545). Any advice in this document is general in nature and does not take account of your personal objectives, financial situation and needs. Before making a decision to acquire any product(s) or to continue to hold any product we recommend that you consider whether it is appropriate for your circumstances and read the relevant Product Disclosure Statement ('PDS'), Additional Information Guide (“AIG”), Financial Services Guide ('FSG'), and the Target Market Determination ('TMD') which can be viewed at www.chu.com.au or obtained by contacting CHU Insurance directly.
This article is bought to you by SCA (WA) sponsor CHU Underwriting Agencies.
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