Do I Need Home Insurance if I Have Body Corporate

You wake up to a trickle, then a gush – a burst pipe in your apartment has flooded your kitchen and living room. The damage is extensive, ruining furniture and personal belongings.  During this chaos, a question pops into your head: “Do I need home insurance if I have body corporate?”

Many strata unit owners assume that their body corporate or owners corporation insurance covers everything. After all, you pay those body corporate fees for a reason, right? While body corporate / owners corporation insurance, as per the Owners Corporation Act 2006, does cover the building’s structure and common areas, it doesn’t necessarily protect your personal belongings or the interior of your unit. This is where home contents insurance comes in.

Owning a strata unit means understanding the interplay between these two types of insurance: body corporate and home contents insurance. Let’s break down the differences, help you understand your coverage, and guide you in making informed decisions about protecting your investment and belongings.

Understanding Body Corporate Insurance

Body corporate insurance (or more precisely your residential strata insurance policy) protects the shared assets and common areas of your building. If you owned a free-standing house on a block of land (under a Torrens Title), you would take out home insurance to protect the house/building. 

The Owners Corporation, the governing body responsible for managing the property, arranges and pays for this insurance using fees levied from all unit owners (as outlined in Section 23A of the Owners Corporations Act 2006).

What Does Body Corporate Insurance Cover?

Body corporate insurance typically includes the following key areas:

  • Building structure: This encompasses the physical framework of the building, including walls, cladding, common hallways/areas, roofs, and common/shared utilities.
  • Common areas: Shared spaces like lobbies, hallways, gyms, pools, and gardens are covered by this aspect of the insurance.
  • Public liability: This protects the Owners Corporation from legal liabilities if someone gets injured or their property is damaged in the common areas.

Limitations and Exclusions

While body corporate insurance provides essential protection, it’s important to be aware of its limitations:

  • Fixtures vs. contents: Generally, it covers fixtures (items permanently attached to the building) but not your personal belongings or movable contents within your unit.
  • Specific exclusions: Certain events or damages might be excluded from coverage, depending on the specific policy. Always review the policy details carefully to understand what’s included and what’s not.

Whether renting or occupying your unit, body corporate insurance provides security for the building. However, renters will still need their own contents insurance to protect their belongings within the unit. Additionally, the investor owner of the unit/apartment/townhouse should look into the landlord’s insurance.

Owner-occupiers may also want to consider additional coverage beyond body corporate insurance to safeguard their personal belongings and any renovations they’ve made to the unit.

Understanding the Gaps: When Body Corporate and Home Insurance Overlap

While body corporate insurance covers fixtures, defining what constitutes a fixture can be complicated. Consider your kitchen and living room: if you replace the standard carpet with floating (non-fixed) flooring, does it become part of the building, covered by body corporate insurance? 

These scenarios highlight the importance of scrutinising both your body corporate and home insurance policies. Don’t assume anything – clarify with your insurance providers if unsure.

If you’re unsure about insurance and how it relates to you then speak with your building’s OC Committee, the appointed professional OC manager, or potentially the insurance broker or insurance company.

Remember, being informed is your best defence against unexpected events. By making informed choices about both body corporate and home insurance, and selecting a reliable OC manager through Strata Management Consultants, you can enjoy the peace of mind that comes with knowing your strata unit is protected from top to bottom. 

 

The contents of this article or website are only intended to provide a general overview of the topics discussed. The author of this article makes no representations as to the accuracy or completeness of any information and the information is not intended to constitute investment, legal or professional advice. You should seek professional advice before acting or relying on any of the content. This article does not contain references to any specific company, organisation or individual, unless expressly specified.
Posted
June 11, 2024
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