This article discusses higher strata insurance due to short-term stays and how owners corporations can recover extra costs from Airbnb owners.
Question: Do short-term stays affect strata building insurance? Must the owners corporation or building management notify the insurer if they occur?
Do short-term stays impact the insurance of a building under an owners corporation, stratum title, or company share structure? If Airbnb or similar short-term rentals are known to be happening, does the building manager or committee have a duty to inform the insurer?
If the owners corporation does not take steps to prevent or disclose short-term letting, how can residents protect themselves from possible insurance issues or premium increases?
Answer: Most states in Australia allow the owners corporation to recover additional costs from the lots that contributed to the increased premium.
Short-term stays and holiday letting (such as Airbnb) can impact a building’s insurance, but the effect depends on how much of the building is being used this way. If it’s only a small proportion of lots—generally less than 10% and with many insurers even up to 20%—then even when disclosed, it usually doesn’t affect the premium. However, once the level of short-term letting increases beyond what an insurer considers a typical residential use, the insurer may apply premium loadings.
Each insurer has a different tolerance for short-term letting, so it’s important for the owners corporation to inform the insurer or broker if they are aware of lots being used for short-term accommodation. This ensures there are no issues with non-disclosure if a claim arises.
If short-term letting does cause an increase in the premium, most states in Australia allow the owners corporation (or equivalent body) to recover those additional costs from the specific lots that contributed to the increased premium.
In Victoria, this right is specifically supported under section 23(3A) of the Owners Corporations Act 2006 (Vic), which provides that:
The owners corporation may levy an additional annual fee on a lot owner if the owners corporation has incurred additional costs arising from the particular use of the lot by the lot owner.This means that if the use of certain lots for short-term stays results in a higher insurance premium, the owners corporation can lawfully recover that additional cost from those lot owners rather than spreading it across all owners.
Tyrone Shandiman Strata Insurance Solutions E: tshandiman@iaa.net.au P: 1300 554 165
This information is of a general nature only and neither represents nor is intended to be personal advice on any particular matter. Shandit Pty Ltd T/as Strata Insurance Solutions strongly suggests that no person should act specifically on the basis of the information in this document, but should obtain appropriate professional advice based on their own personal circumstances. Shandit Pty Ltd T/As Strata Insurance Solutions is a Corporate Authorised Representative (No. 404246) of Insurance Advisenent Australia AFSL No 240549, ABN 15 003 886 687.
This post appears in the December 2025 edition of The VIC Strata Magazine.
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