WA: Q&A Strata insurance requirements

In a 45 apartment strata complex in WA, our strata building insurance included cover for timber floorboards in apartments. Owners were informed that, in an effort to reduce the premium, the council of owners decided to remove floorboards from insurance cover in our renewal.

Can the COO change the insurance cover or does this decision need to be voted on at an upcoming AGM?

Answer: Legislation does not mandate the strata corporation to insure floating floors so the council of owners is entitled to remove this cover.

The committee has an obligation to insure in accordance with the legislation.

According to the Strata Titles Act 1985 (WA), and consistent across all Australian legislation, carpets and temporary floor coverings are excluded from the definition of an insurable asset. Consequently, the council of owners is not obligated to provide insurance cover for these items.

While some insurers automatically include floating floors in their policies, others offer this coverage as an optional benefit. It’s important to note that opting out of this coverage can be a more prudent approach. Often, floating floors are already covered under an owner’s contents/landlord insurance, which means paying for duplicate cover through strata insurance is unnecessary. In the event of a claim involving only the floating floor, the owner must typically claim on the strata insurance, as most contents or landlords’ policies include provisions that exclude items insured by the strata. Such claims can unnecessarily affect the strata’s claims history and lead to increased premiums.

Since the legislation does not mandate the strata corporation to insure floating floors, the council of owners is entitled to remove this cover. However, owners can still arrange their own cover through their personal contents or landlords insurance.

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 2024 edition of The WA Strata Magazine.

Question: We are a four lot strata scheme with minimal machinery or equipment. Should we include cover for machinery breakdown in the residential strata insurance?

We are a small four lot strata group located over two storeys, i.e. two units on the ground floor and two on the first floor.

The development does not have a lift, gym, swimming pool, etc. Each unit has a garage with a garage door, reverse cycle ducted air conditioning and water heater. A common property electronic main gate gives access to the units in the development. The strata company does not own any other significant machinery or equipment.

Should we include cover for machinery breakdown in the residential strata insurance?

Answer: We generally recommend considering machinery breakdown insurance if you possess machinery items.

We generally recommend considering machinery breakdown insurance if you possess machinery items, which can encompass a wide range of equipment, including but not limited to pumps (including pool pumps), electric garage doors, elevators, central air-conditioning units, and various other machinery or electrical equipment.

In most instances, strata insurance policies provide fusion cover for motors with a power rating under 5kw. You need to refer to your specific strata policy wording and assess the motor sizes of equipment such as gates, garage doors, and ducted air conditioners to ascertain if they are eligible for the limited fusion cover.

If any of the motors powering these devices exceed the 5kw threshold or broader breakdown cover is required beyond fusion, machinery breakdown insurance should be considered.

Tyrone Shandiman
Strata Insurance Solutions
E: tshandiman@iaa.net.au
P: 1300 554 165

This post appears in Strata News #674.

Question: Our strata plan is in a bushfire prone area. Should we consider the appropriateness of our building materials?

Given that our strata plan is in a bushfire prone area, this prompts considerations about the BAL rating and the necessary repairs for the common property. It also raises questions about appropriate materials and who should oversee these matters. Should the control rest with the strata manager, the committee, individual lot owners, or perhaps a collaborative effort involving all three parties?

Answer: Failure to comply can expose owners corporations to liabilities associated with non-compliance.

Compliance with relevant building and fire codes is a paramount consideration for any strata building, as failure to comply can expose owners corporations to liabilities associated with non-compliance.

From an insurance perspective, insurers rate more favourably on buildings with 100% non-combustible materials. The most favourable ratings are for properties with brick or concrete external walls. Insurers also rate based on the property’s location, including proximity to bushland, and will consider fire safety and risk engineering factors.

In cases where neither the insurer nor local authorities require a change in materials, the decision to upgrade building materials to reduce the property’s risk rating falls to the owners corporation. This proactive step can potentially enhance the property’s insurability by improving its risk rating. Nonetheless, such a decision requires careful consideration and consultation, ideally with a qualified insurance broker.

Before embarking on any material upgrade project, seeking advice from an insurance adviser to understand the benefit to the owners corporation is highly advisable.

Tyrone Shandiman
Strata Insurance Solutions
E: tshandiman@iaa.net.au
P: 1300 554 165

This post appears in the November 2023 edition of The WA Strata Magazine.

Question: Our small self managed scheme arranged new insurance with a company that does not offer strata title insurance. The type of cover is ‘building insurance’. Is this the right insurance for our scheme?

I am the Treasurer/Secretary of a self managed six lot complex in WA. Our chairperson arranged new insurance as we have found our previous insurance too expensive. The new insurance is with a company that does not offer strata title insurance. The type of cover is ‘building insurance’. I note our previous insurance was ‘strata title residential insurance’. Is the new insurance policy relevant to our scheme?

Answer: Given the complexities involved in selecting appropriate strata insurance, I recommend seeking the advice of a reputable Insurance Broker or appointing an SCA (WA) Accredited Strata Manager to assist you with your legislative responsibilities and duties.

While we cannot comment on the specifics of individual policies, I can provide some general information regarding strata insurance in accordance with the Strata Titles Act 1985 of Western Australia.

It is important to note that the choice of strata insurance requires careful consideration, as the Act stipulates certain requirements for adequate coverage.

As the strata company comprising all lot owners, you have a legal obligation to ensure that all insurable assets within the scheme are insured for their replacement value.

It is crucial to understand that all owners, collectively or individually, bear joint and several financial obligations in the event of any shortfall if the sum insured or coverage proves insufficient to cover the actual replacement value.

In accordance with the Act, specifically sections 97 – 99, the strata company must ensure that the following insurance is in place for the strata titles scheme:

All insurable assets of the scheme must be insured against fire, storm and tempest (excluding damage by sea, flood, or erosion), lightning, explosion, and earthquake. The insurance coverage should be either:
1. up to the replacement value, or
2. up to the replacement value for specified events, with a maximum amount specified in the insurance contract that is deemed reasonable in the circumstances.

The strata company itself must be insured against property damage, as well as death, bodily injury, or illness for which it could be held liable in damages. The minimum required coverage for liability is $10,000,000 unless a different amount is determined under the regulations.

Given the complexities involved in selecting appropriate strata insurance, I recommend seeking the advice of a reputable Insurance Broker or appointing an SCA (WA) Accredited Strata Manager to assist you with your legislative responsibilities and duties. They can provide expert guidance and ensure that your insurance policy aligns with the requirements of the Strata Titles Act.

It is advisable to request written assurance from the broker confirming that the insurance policy meets the specific obligations outlined in the Act.

Please keep in mind that this response is of a general nature and should not be considered legal or professional advice.

Liz Florence
Abode Strata
E: abode@abodestrata.com.au

This post appears in Strata News #665.

Question: One owner has let their lot to a tattoo parlour in our commercial strata plan. This has caused our insurance premiums to increase dramatically, and we are finding it very hard to get insurance. Can we pass on the increase in insurance premium costs to the tattoo parlour?

I’m a lot owner in a commercial strata plan. One owner has leased their lot to a tattoo parlour.

Lot owners have nothing against the business. However, our insurance has dramatically increased.

The strata company is trying to get other quotes, but we can’t find specialist brokers to assist. Who provides this type of strata insurance? Can we pass on the increase in insurance premium costs to the tattoo parlour?

Answer: In Western Australia, the legislation includes a provision enabling a strata corporation to require an owner to cover additional premiums paid for the strata insurance related to risks on their lot – this would extend to tenants such as tattoo parlours.

Strata properties incorporating tattoo parlours often pose challenges when securing insurance. This is primarily because a significant number of strata insurers classify tattoo parlours as falling outside the scope of their underwriting guidelines. Finding insurers willing to provide cover for properties containing tattoo parlours is difficult.

Insurers have often expressed concerns of associations with outlaw groups, which can lead to concerns about criminal activities, vandalism, break-ins, and other criminal acts that could result in property damage.

While a few insurers might be willing to provide coverage for such properties, the above considerations contribute to the limited availability of insurance options. Unfortunately, these options will be substantially more expensive than if the property does not contain a tattoo parlour.

In Western Australia, the legislation (Strata Titles Act 1985 Section 98) includes a provision enabling a strata corporation to require an owner to cover additional premiums paid for the strata insurance related to risks on their lot – this would extend to tenants such as tattoo parlours.

To facilitate this, the strata corporation should illustrate the premiums associated with the tattoo parlour. Receiving advice from a strata broker is recommended during this process. Strata Insurance Solutions has established a structured approach to support clients in this undertaking.

Section 98 Notice to member of strata company

If it is reasonably necessary in order for a strata company to obtain the required insurance on reasonable terms, the strata company may give written notice to a member of the strata company requiring the member to do 1 or more of the following — (c) to pay a specified amount to the strata company within a specified period, being an amount equal to that part of the premium payable by the strata company for the required insurance attributable solely to the risk associated with something within the member’s control.

Tyrone Shandiman
Strata Insurance Solutions
E: tshandiman@iaa.net.au
P: 1300 554 165

This post appears in the September 2023 edition of The WA Strata Magazine.

Question: Is the electrical wiring in the ceiling of my unit covered by strata insurance?

Answer: We confirm utility services including electrical wiring in a unit is covered along with other permanent fixtures and fittings subject to the policy terms, conditions & exclusions.

Tyrone Shandiman
Strata Insurance Solutions
E: tshandiman@iaa.net.au
P: 1300 554 165

This post appears in the October 2022 edition of The WA Strata Magazine.

Question: I’m the owner of a ground-floor commercial office in a mixed commercial and residential strata complex. 5 wall-to-ceiling plate glass windows form the front wall of the office. Are these windows covered by the strata insurance or by the owner’s insurance?

Answer: Glass being a permanent fixture is covered by a strata policy.

Tyrone Shandiman
Strata Insurance Solutions
E: tshandiman@iaa.net.au
P: 1300 554 165

This post appears in the October 2022 edition of The WA Strata Magazine.

Question: Landlord lot owners in our small scheme make claims for damage caused by their tenants on our strata insurance. This has increased our premium. Shouldn’t they have landlord insurance?

Should a strata lot owner who rents out their lot have landlord insurance? I live in a 3 lot complex. The other 2 lots are rentals. The landlord lot owners make claims for damage caused by their tenants on our strata insurance. This has increased our strata insurance premium.

This isn’t fair. They are collecting rent on their lots and should have seperate landlord insurance to cover damage caused by their tenants. It doesn’t seem reasonable that I should bear the increase in insurance premiums for their tenant’s damage.

Answer: Strata Insurance covers all items defined as building – it is not possible to get a separate landlords policy to cover building items that the strata policy covers.

Strata Insurance covers all items defined as building – it is not possible to get a separate landlords policy to cover building items that the strata policy covers, hence the reason legislation requires the strata corporation to have cover.

The basic principle is that if you pick the unit up and shake it, anything that falls out is lot owners’ contents/landlords + temporary flooring such as carpet, blinds & curtains, appliances that are not permanently attached.

Other permanent fixtures including but not limited to kitchen and bathroom cabinetry are covered by strata insurance subject to the policy terms, conditions & exclusions.

When you purchase in strata, you buy into the claims history of the complex – unfortunately the only way to avoid a shared claims history is not to own in strata at all.

Tyrone Shandiman
Strata Insurance Solutions
E: tshandiman@iaa.net.au
P: 1300 554 165

This post appears in the August 2022 edition of The WA Strata Magazine.

Question: Can a lot owner lodge an insurance claim against the Strata Company insurance policy without approval from the Strata Council?

Can a lot owner lodge an insurance claim against the Strata Company insurance policy without approval from the Strata Council?

Can a Strata Manager assist a lot owner to lodge an insurance claim against the Strata Company insurance policy without approval from the Strata Council?

We were under the impression that a claim needs to be approved by the Strata Company prior to lodgement so the Strata Company may exercise their option to pay for damages and not claim against the policy.

Our Strata Council has been told any lot owner can lodge a claim. The Strata Council is concerned that excessive claims could jeopardise our policy and result in higher excesses and premiums.

Answer: A lot owner who has contributed to insurance premiums for a policy covering property they own can demonstrate an insurable interest in the policy.

Generally speaking, a lot owner who has contributed to insurance premiums for a policy covering property they own can demonstrate an insurable interest in the policy. This means in instances where there is a disagreement between the owner and committee over whether a claim should be lodged, an insurer may give precedence to insurable interest over committee expectation.

The committee can dispute the lodgement of the claim, but we believe ultimately the owner’s insurable interest will prevail over the committees express wishes.

The Strata Titles Act sets in place a requirement for the strata corporation to insure assets defined in the Act. It does not give the strata corporation the ability to choose which claims are lodged, nor does it give the strata corporation the ability to deny an owner from accessing a policy they are insured by.

Tyrone Shandiman
Strata Insurance Solutions
E: tshandiman@iaa.net.au
P: 1300 554 165

This post appears in the June 2022 edition of The WA Strata Magazine.

Question: Why have I been referred to my strata manager to make a claim regarding our strata insurance? Surely the insurance company has a claims person.

Why have I been referred to my strata manager to make a claim regarding our strata insurance?

Why are they involved? Surely the insurance company has a claims person though I note the Strata Company gets paid a “premium” when we take out insurance through their recommended broker.

Answer: A broker will provide advice, whereas the strata manager will generally ensure communication is actively passed to the lot owners and help to follow up matters that need to be acted on.

Generally insurers will redirect a Lot Owner back to the broker or Strata Manager looking after that strata company. The Strata Manager usually holds the records of the strata company, which includes all the names and addresses / contacts of Lot Owners, so they are able to identify if the person inquiring to lodge a claim is entitled to make a claim on that policy.

However, the above may not stop lodgement of claim details being made, but confirmation of the claim made will generally be sent through to the broker or Strata Manager before it proceeds.

As an example: there may be a high excess or in some cases the Council of Owners wants to be made aware of all claims before they are submitted.

These are some of the reasons claims may be redirected back.

A Strata Manager’s role includes the administration handling service of the Strata Company. This includes arranging and requesting insurance quotes for the strata company and administrating all claims communications and attend to any emergency repairs if required. Strata Managers usually have a number of maintenance builders who can attend to emergencies and make safe repairs if required.

Insurance companies do have claims personal to support your claim. After the claim is lodged, direct contact with the Lot Owner/tenant/Property Manager usually happens by the insurer assigned builder/assessor if the claim requires such. The strata manager may not be as involved if the claim exclusively affects a particular lot.

It is usually only during the initial lodgement that claims are generally re-directed back through the broker or Strata Manager. A broker is involved in the claims management and communication process, and often assists Lot Owners or their representatives when reviewing claim entitlements, helping with assessors and so forth, to ensure that repairs are satisfactorily completed. A broker will provide advice, whereas the strata manager will generally ensure communication is actively passed to the lot owners and help to follow up matters that need to be acted on.

Leonie Milonas
PSC Property Lync Insurance Brokers
E: leonie@lyncinsure.com.au
P: 1300 127 503

General Disclaimer: This response is prepared for informational purposes only and is a general response only. It is not insurance, financial or legal advice and should not be relied on as insurance, financial, strata or legal advice. Before you act you should seek specific advice by consulting with a qualified insurance advisor, a strata consultant or seek legal advice.

This post appears in Strata News #551.

Question: Is there any obligation for lot owners to have Public Liability Insurance in place for their lot?

Is there any obligation for lot owners to have Public Liability Insurance in place for their lot? If a resident is injured on Common Property such as a Garden area and the lot owner has no insurance, can they be sued for damages? The use is granted by the Council of Owners, but where does the lot owner stand?

Is there any obligation for the Council of Owners to request evidence of cover from all lot owners? As far as I can see, this is not addressed in the Act.

Answer: If the owner chooses to not take out insurance it is at their own peril.

There is no specific obligation.

The strata corporations insurance covers personal injury & property damage legal claims made against them by other parties including in the above examples (subject to the terms and conditions of the policy).

If the owner chooses to not take out insurance it is at their own peril. I do not believe the Act gives the strata corporation the power to enforce a requirement for the lot owner or tenant to take out insurance.

Tyrone Shandiman
Strata Insurance Solutions
E: tshandiman@iaa.net.au
P: 07 3899 5129

This post appears in the September 2021 edition of The WA Strata Magazine.

Question: Is strata insurance for small strata schemes in WA only available from a hand full of suppliers?

I’ve been told by an insurance broker that unless it is a high rise multi million dollar property, insurance for small strata schemes in Australia are only available from Longitude, QUS, Strata Community and CHU.

Is this true? Otherwise, what other insurers will provide cover to a small complex of 6 2×1 single storey units in WA?

Answer: There are other direct insurers in the market who will provide quotations and insure smaller strata schemes.

Strata specialists insurance underwriting agencies, include those listed above, along with Flex Insurance, AXIS Underwriting and Strata Unit Underwriting, are among the mix. There are other insurance underwriting agencies that have strata insurance products, but they specialise in specific areas only.

There are other direct insurers in the market who will provide quotations and insure smaller strata schemes.

Leonie Milonas
PSC Property Lync Insurance Brokers
E: leonie@lyncinsure.com.au
P: 1300 127 503

This post appears in Strata News #508.

Question: Who can be held liable in a Bullying and Harassment case by a tenant in a Strata development? Does the COO need to take out an insurance cover against such claims?

Answer: Under the Strata Titles Act there is no relationship between the strata company and a tenant.

Who can be held liable in a Bullying and Harassment case by a tenant in a Strata development?

Brian Rulyancich:

Under the Strata Titles Act there is no relationship between the strata company and a tenant. The relationship exists between the owner of a lot and his or her tenant in this instant the tenant as the occupier of the lot is contravening the following by-law:

Schedule 2 – Governance item 4 Behaviour of owners and occupiers.

An owner or occupier of a lot must be adequately clothed when on common property and must not use language or behave in a manner likely to cause offence or embarrassment to an owner or occupier of another lot or to any person lawfully using common property.

The strata company would need to issue the appropriate notices to the owner of the lot detailing what the behaviour of their tenant and what needs to be done to rectify the situation. If it continues it go to SAT for an order and possible fine.

Also due to the nature of the incident it may also be a Police matter.

Does the COO need to take out an insurance cover against such claims?

Tyrone Shandiman:

Strata Insurance policies provide covers to assist a strata corporation in the event a bullying and harassment claim is made against them.

The following sections in most strata policies should be considered by the strata corporation:

Legal Defence Expenses covering Legal fees, costs, and expenses incurred in legal proceedings initiated against the strata corporation. It should be noted that this cover is limited to the costs associated with defence costs only and does not extend to cover settlements, judgements or damages. Cover under this section is not an “open cheque book” and a claim is only indemnified if the strata corporation can demonstrate there are reasonable prospects of a successful defence.

Office Bearers Liability insurance which covers claims made against office bearers in the event a legal claim for bullying & harassment. This section extends to both defence costs and settlements, judgements or damages.;

The Strata Corporation should seek advice from their insurance adviser on cover available for bullying & harassment claims in their strata policy if they believe their cover is specifically required for this risk exposure.

Brian Rulyancich
StrataTAC
E: strata@stratatac.com.au
P: 0428 970 067

Tyrone Shandiman
Strata Insurance Solutions
E: tshandiman@iaa.net.au
P: 07 3899 5129

This post appears in the July 2021 edition of The WA Strata Magazine.

Question: If a strata company cancels its insurance in March 2016, can it still lodge a claim against that policy if legal action is commenced within the statute of limitations for something that occurred prior to March 2016?

Answer: There may be no limitation on how far back you can lodge a claim

It does solely depend on the policy terms and conditions. If the policy in 2016 was an occurrence policy wording, and it covers events that occurred during the policy period, then there’s no limitation on how far back you can lodge a claim. As an example, if you have a public liability incident where someone has slipped and fallen over in 2016, and they’ve had some complications five years later, and they decide to sue the Owners Corporation, the policy enforced at the time would be the policy that you seek to take cover for.

There are other sections within a strata policy, which is a claims made policy. A good example of a claims made policy is the office bearers liability section, and the legal defence expenses section. Those sections say that if you had a claim in 2016, the policy enforced today, the day of notification is the policy that responds.

You’d need to seek advice from your broker or advisor on which policy to specifically look for. Just be mindful that if you’re looking at the claims made policy, so today’s policy, you may have some disclosure issues if you fail to disclose a 2016 incident that you were aware of.

Tyrone Shandiman
Strata Insurance Solutions
E: tshandiman@iaa.net.au
P: 07 3899 5129

This post appears in Strata News #481.

Question: A lot owner is challenging our strata insurance valuation as being too high

One of the owners in our group is challenging our current valuation as being too high. He believes properties here in WA haven’t risen in value for several years.

Our insurance broker obtained quotes from a range of insurers and we (the council of owners of a self-managed strata group) believe we have obtained a good deal. It would cost more to get a full valuation than if we just paid the extra suggested in the current valuation. This would be around $60/unit/year. Is this a fair response to this owner?

Answer: Ensure you’ve demonstrated that you’ve done your due diligence.

As a strata Corporation, the best way to overcome any challenge by an owner around whether you’re doing the right thing is to ensure that you’ve demonstrating that you’ve done your due diligence.

A strata Corporation should have a valuation done for the building, which would be the basis on which you insure the building for. If you’ve got a valuation, and an owner is challenging the valuation, what I would want to know as a committee member is ‘Where are your workings and who have you consulted that has a higher level of qualification?’ then ‘Who has the committee consulted?’, So that’s the first question I’d want to know.

If there’s no valuation, I think it would be a fair and reasonable thing to get a valuation done. For a property with 12 lots, I’ve seen valuations, through companies like Leary & partners. They come in at around the $500 to $700 mark. If you don’t have a valuation, do your due diligence and get one done.

Tyrone Shandiman
Strata Insurance Solutions
E: tshandiman@iaa.net.au
P: 07 3899 5129

This post appears in the May 2021 edition of The WA Strata Magazine.

Question: Does the insurance policy require being voted for at an AGM, or is it the responsibility of The Council of Owners? What are our strata insurance requirements in WA?

Answer: The Strata Titles Act 1985 (STA) s127(c), outlines the matters for an AGM.

The Strata Titles Act 1985 (STA) s127(c), outlines the matters for an AGM. Which includes presentation of copies of insurance certificates and schedules for Required Insurance as per the STA requirements.

At the AGM the owners give direction to the Council how they wish to insure the buildings after the required and desired building coverages has been considered.

Where there is a strata manager involved, they will arrange renewal documents to be sent, obtain quotes and arrange a valuation etc. if required and send to the Council seeking instructions and approval from them. The Council has the authority from the General Meeting to make these instructions to the Strata Manager or in some cases directly with a broker or insurer, if a strata manager is not involved.

Leonie Milonas
PSC Property Lync Insurance Brokers
E: leonie@lyncinsure.com.au
P: 1300 127 503

This post appears in the March 2021 edition of The WA Strata Magazine.

Question: How far ahead should insurance policies cover? In our AGM in November we will be asked to vote for a new policy that will cover November 2021- November 2022. Are these WA strata insurance requirements?

Answer: Generally an insurance policy is issued as a 12month policy, which expires at 4pm on the expiry day. In advance you may ask an insurer to extend your insurance renewal by a few months, with some insurers not issuing policies beyond 18mths.

Leonie Milonas
PSC Property Lync Insurance Brokers
E: leonie@lyncinsure.com.au
P: 1300 127 503

This post appears in the March 2021 edition of The WA Strata Magazine.

Question: We have 4 commercial units in our strata property in Perth. Our insurance has come back extremely high as one of the units is occupied by a high risk business using highly flammable materials etc. Should we all contribute equally to the cost of the insurance?

We have 4 commercial units in our strata property in Perth. Our insurance has come back extremely high due to the fact that one of the units undertakes high risk business using highly flammable materials etc.

Is it correct that we should all pay the same amount towards the insurance? Or can the business that is conducting high risk work pay the higher amount?

Answer: The strata corporation is able to adjust the premium payable by a lot owner that fairly represents the proportion of premium payable attributable to activities carried on the owner’s lot.

Section 98 of the Strata Titles Acts 1985 states:

(1) If it is reasonably necessary in order for a strata company to obtain the required insurance on reasonable terms, the strata company may give written notice to a member of the strata company requiring the member to …… (c) to pay a specified amount to the strata company within a specified period, being an amount equal to that part of the premium payable by the strata company for the required insurance attributable solely to the risk associated with something within the member’s control.

It follows, the strata corporation is able to adjust the premium payable by a lot owner that fairly represents the proportion of premium payable attributable to activities carried on the owner’s lot.

For example, if a building insurance premium would normally cost $3,000 but due to a high hazard activities carried out in one unit the premium is $5,000, the strata corporation may require that lot owner to pay the $2,000 premium difference in addition to their standard insurance contribution.

We would recommend the strata corporation seek advice from an insurance broker to assist in demonstrating the premium component attributable solely to the risk associated with something within the member’s control.

Tyrone Shandiman
Strata Insurance Solutions
E: tshandiman@iaa.net.au
P: 07 3899 5129

This post appears in Strata News #458.

Question: How many years ahead does a quote for insurance renewal need to be tabled at an AGM?

How many years ahead does a quote for insurance renewal need to be tabled at an AGM?

At our AGM in November 2019 the insurance quote was tabled for the policy commencing in Nov. 2021. Is this standard practise? Are there conditions that make this legally enforceable?

Answer: An Insurance policy renewal is issued for 12 months generally.

An Insurance policy renewal is issued for 12 months generally.

Example:

Inception date: 1st November 2020

Expiry Date: 1st November 2021 expiring at 4pm

In respect to any other insurer quotation for the same current covers these are quoted for the same date period, unless the Owners have decided to extend their expiry date generally for financial reasons.

In terms of quote issuance with an inception date commencing beyond 12 months this is unusual and generally would not be honoured by insurer. The normal practice for most insurers is not to issue a quote before 30 days prior to the expiry date, as circumstances relating to that risk can change.

In some cases indication quotes may be issued but this generally only occurs in new developments where budgeting is required.

Quotes generally remain current for 30 days only and any enforceability of that quote is a decision of the insurer, as they reserve the rights to honour a quote issued by them, especially if the quote falls outside of the quoted period.

Leonie Milonas
PSC Property Lync Insurance Brokers
E: leonie@lyncinsure.com.au
P: 1300 127 503

General Disclaimer: This response is prepared for informational purposes only, and is not insurance, financial or legal advice and should not be relied on as insurance, financial, strata or legal advice. You should consult with a qualified strata or legal advisor.

This post appears in Strata News #418.

Question: How much should our strata complex be insured for? The current insurance level essentially equates to the value of each unit times the number of units but should risk of damage be taken into account?

We are located in Perth, WA. How much should our strata complex be insured for? Should a proper valuation be conducted to determine the risk of damage and the value required to be covered for the risks? The current insurance level essentially equates to the value of each unit times the number of units.

Our strata complex comprises conjoined 2 storey townhouses

The complex is a number of separated units in blocks of four and two units

Answer: The strata insurance requirements in WA and all states around Australia is that the property is insured for full rebuild value

The strata insurance requirements in Perth, across WA and all states around Australia is that the property is insured for full rebuild value. The rebuild value can sometimes be more than the sale value of the units, but really when it comes to valuation of the property that really falls within the remit of a professional quantity surveyor. The best way to ensure that you’re comfortable with sum insured is to seek the services of a quantity surveyor to provide a recommendation on the sum insured for that value to make sure that you comply with the legislation.

How often should this be done? In Queensland, it’s every five years. This is a requirement by law. In other states, there’s no requirement by law. In New South Wales, it used to be five years, but that was also repealed in the 2015 legislation.

Really look at the value of the property. That’s a good start. If it’s a huge property with hundreds of lots, you might want to get one every few years because insurers will automatically index the premium by, say, 5% and when you’re dealing with large sums of money, if it’s over indexed, it might mean that there’s a cost benefit in getting more regular valuations. Five years is what we would recommend on properties, but if there’s no legislation obviously, then it really is up to the committee to determine if they’re comfortable with the valuation, and if they’re not, then they should get it re-valued.

We’ve got properties that haven’t had a valuation for 10 or 15 years and the insurers apply to 5% indexation but the actual cost of rebuilding was only ever increased by 1% over those years, and there’s been a major reduction in the sum insured because the valuation has been bought back into line with what the CPI or indexation actually was.

When we are doing a renewal, we look at whether we think it would be beneficial for them to get a valuation. One of the things we do is we keep all of our valuations on record, but whenever we provide a renewal our Statement of Advice specifically talks about valuations and when you should consider them. From our perspective, whenever a client gets one of our documents we actually raise that and remind lot owners of their requirements to get valuations and also just discuss and talk about the fact that you should consider a valuation if you’re not sure about the sum insured.

Tyrone Shandiman
Strata Insurance Solutions
E: tshandiman@iaa.net.au
P: 07 3899 5129

This post appears in the October 2020 edition of The WA Strata Magazine.

Question: Can you please highlight any specific changes or strata insurance requirements in WA for where the strata company has mixed use, commercial and residential use.

Can you please highlight any specific changes or strata insurance requirements in WA for where the strata company has mixed use, commercial and residential use, i.e. can we hold a joint policy, for instance, or require separate ones for commercial residential areas of common property.

Answer: Within the act, from my understanding, it doesn’t actually differentiate like that.

Within the act, from my understanding, it doesn’t actually differentiate like that.

Insurances comes under two areas. Section 97 required insurance, and another section for specifically single tier insurance. So if you read through what the Act requires, it just basically states that you must insure for the replacement value for your insurable assets and obviously, for public liability insurance. It doesn’t provide a difference between mixed use commercial or residential, other than when it comes to things like internals like proprietors, fixings and things like that. Commercial is a little bit different.

The question really is around can something different be done with the insurance arrangements. There are a mixture of different arrangements that we can do, and brokers around the country can do. It really just depends on the specific circumstances of that scheme as to what we can do.

Leonie Milonas
PSC Property Lync Insurance Brokers
E: leonie@lyncinsure.com.au
P: 1300 127 503

This post appears in Strata News #410.

Question: I’ve heard there is only one company in WA that will insure Survey Strata groups of units? Is this correct?

Answer: There is a small number of insurers who will consider insurance for Survey Stratas Community Property (CP).

This is incorrect. There is a small number of insurers who will consider insurance for Survey Stratas Community Property (CP). However, where the individual Lot buildings (some or all) are also insured, this also changes what insurance options are available to you.

You would need to seek insurance advice on what options are available to you.

Leonie Milonas
PSC Property Lync Insurance Brokers
E: leonie@lyncinsure.com.au
P: 1300 127 503

This post appears in Strata News #380.

Question: I live in a small strata scheme. I’ve found a cheaper quote with a lower excess. Am I able to insure my unit separately with a different insurer to the other lot owners? What about the common property?

I am an owner/occupier in a group of 4 on a Strata Plan in Perth, Western Australia. The units were built in 2008, they have a common driveway with units 2, 3 and 4 and each unit as adjoined to one another with a common cavity wall. The group has always been insured through a broker and I have always found the policy to be high compared to what I used to pay for a much larger home a few years earlier.

We also pay a $500 excess which I strongly object to. I have obtained a quote from a local WA insurer that comes out approx $600 cheaper with the same excess or $431 cheaper with a $200 excess. I have communicated this with the other 3 three owners, one is owned by Community Housing. To my astonishment, the two other private owners do not want to change.

This same insurer said I can insure my property separately. It will be more expensive but at least I don’t have to deal with the other owners and my excess will be much cheaper. But is this possible? Am I able to insure my unit separately with a different insurer and what about the common property?

Answer: By having strata insurance, it means that at all times you have consistent insurance in place, both for your home unit and common property areas.

In answering this question, I have assumed your strata scheme falls under built strata – Lots in Single Tier Schemes and not a Survey Strata Scheme. As my response would be different for each scheme type.

Lots in single tier schemes come under Schedule 2A Part 5 cl.53A – 53E and where applicable Required Insurance S97 of the Strata Titles Act 1985 as amended in 2018.

A strata under cl.53B(2) it states strata company may determine by ordinary resolution agree to insure in respect to matters as referred in the subclause (1) and at any time by ordinary resolution revoke that determination.

Please refer to the following reference links:

It is not advisable to double insure your property as if you try to make a claim, technically you would be involving 2 insurers and this would make your claim complicated. I am unable to comment on the insurance quotes you have obtained, however, what is really important is to ensure the insurers you have obtained quotes with are like for like and similar in sum insured value.

Generally, strata insurance is a very broad cover, providing for accidental damage, not otherwise excluded by their exclusions. It also comes with other additional covers, which relates to unique strata risk exposures. As far excesses are concerned, some strata insurers do offer lower excesses in some cases. Further by having strata insurance, it means that at all times you have consistent insurance in place, both for your home unit and common property areas, such as your driveways, fencing and all undergrounds services, which are normally connected. Single home insurance may miss these important areas out of their quote and you would need to verify this with them.

Leonie Milonas
PSC Property Lync Insurance Brokers
E: leonie@lyncinsure.com.au
P: 1300 127 503

This post appears in Strata News #377.

Question: We have been with the same strata insurance company for 10 years. As a lot owner, do I need approval from the other 3 owners to call insurance companies and gather some comparable quote?

We pay over $3500 per year for strata insurance. As a lot owner, should I be able to get approval from the other 3 owners to call insurance companies for a few comparable quote? We have been with the same insurance company for 10 years and have never compared prices or asked for a reduction in premiums.

Answer: Not all strata insurance products are the same and therefore it’s important when applying for quotes that you have some understanding on how to compare these policies.

From your question, I assume your strata scheme is a 4 Lot single-tier scheme. This means the requirement to insure is found in the Strata Titles Act 1985 as amended by Strata Titles Amendment Act 2018 (STA), under Schedule 2A Part 5 – Insurance for lots in single tier strata scheme.

I don’t know if you are self-managed and whether you have any elected office bearers or not, as normally insurance is a delegated function for the office bearers to arrange. Generally for small schemes and with elected council members, you may attend a general meeting, and as 4 owners decide important matters for the strata company, such as insurance.

Insurance is usually one of your major expenditure items and obtaining alternative quotes is prudent, so that you can check the competitiveness of your current insurance policy, but at the same time, it is important to understand the cover that applies to your quotes as well. Not all strata insurance products are the same and therefore it’s important when applying for quotes that you have some understanding on how to compare these policies, along with the quote.

In WA there are a number of specialist strata insurance brokers, who can do this for you, or otherwise, you can do it yourself, as long as you line up all the policies you are obtaining other quotes from and ensure your covered items are similar.

Leonie Milonas
PSC Property Lync Insurance Brokers
E: leonie@lyncinsure.com.au
P: 1300 127 503

This post appears in Strata News #356.

Question: What insurance do I need for a strata property? We are looking at purchasing a property that is part of strata that was formed pre 1985. What are our particular strata insurance requirements in WA?

We are looking at purchasing a property that is part of strata that was formed pre 1985. What are our particular strata insurance requirements in WA?

There are 2 houses on the block and we understand we only own 100% of the house and 50% of the surroundings.

I’m confused. What insurance do I need for a strata property?

Also, what are we liable for? e.g. neighbours fence blows over, tree on their property falls down, they fall over a tree root and injure themselves etc.

Are we able to access their property as we own half of it and vice versa?

I would appreciate any advice you can give as we know nothing about this type of strata and need to be clear before we purchase this house.

Answer: This depends on whether it is a Survey Strata you’re purchasing or strata single tier.

Please note: this response was provided prior to the proclamation of the new strata title amendments.

The answer depends on whether this is a Survey Strata you’re purchasing or strata single tier.

If it’s Single Tier pre-1985 strata plan, then the back and front yards are likely to be common property and this includes any structures, like garden sheds or carports etc. Without the strata plan, it’s difficult to comment.

In terms of insurance, if it is a single-tier pre-1985 with back and front yards as common property, you’re best to purchase strata insurance, which then also includes common property insurance including legal liability insurance.

As far as access to yards etc. again it depends on the strata plan and further whether an automatic merger has occurred and if that did or didn’t extend to the yards. Older schemes most yards are common property pre-1985.

I would advise you to speak to a consultant about the strata plan boundaries as this will answer your question specifically. Landgate may be able to assist the boundary question specifically in this instance as well.

Leonie Milonas
PSC Property Lync Insurance Brokers
E: leonie@lyncinsure.com.au
P: 1300 127 503

This post appears in Strata News #195.

Have a question about your insurance needs for a strata property or something to add to the article? Leave a comment below.

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General Advice Warning
This advice has been prepared without taking into account the client’s objectives, financial situation or needs. Because of that, before acting on the above advice, the client should consider its appropriateness (having regard to their objectives, needs, and financial situation). The above is a general response only to questions asked, not taking into account personal circumstances and is not legal advice. If the advice is related to the acquisition of an insurance contract, the client should obtain a Product Disclosure Statement relating to the product before deciding whether to acquire it.

Please note that parts of this article were provided prior to the proclamation of the new strata title amendments and will be updated in due course.

Looking for strata information concerning your state? For state-specific strata information, try here.

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Comments

Keng Seah says

October 7, 2023 at 4:21 pm

We are a small strata group of 4 apartments located over 2 storeys, ie 2 units on ground floor and 2 units on first floor. The development does not have a lift, gym, swimming pool etc,. Each unit has their own garage with their own garage door, reverse cycle ducted air conditioning and water heater.. There is a common electronic main gate which gives access to the four units in the development. The Strata company does not own any other significant machinery or equipment.
In view of the above, should we include cover for machinery breakdown in the residential strata insurance?

- Em says
  
  October 11, 2023 at 9:09 am
  
  Check with the insurer – many standard policies include machinery breakdown to $5000 (or similar limited sum) which could be adequate for your gate motor.
  
- Nikki Jovicic says
  
  November 7, 2023 at 2:16 pm
  
  Hi
  
  Although this is a VIC article, the information may assist – VIC: Do We Really Need Mechanical Breakdown Insurance?
  
- Liza Admin says
  
  November 8, 2023 at 2:07 pm
  
  Hi Keng
  
  Tyrone Shandiman, Strata Insurance Solutions has resppnded to your comment in the article above.
  
Tony says

October 2, 2022 at 12:07 pm

Small Strata group of 4 houses. We have no common property and no shared facilities. We each have our own driveway and no common walls. Is it possible for each owner to insure their own property separately.?

- Nikki Jovicic says
  
  October 7, 2022 at 11:26 am
  
  Hi Tony
  
  This WA article should assts:
  
  WA: Q&A Strata Insurance for common driveway
  
  Thanks
  
Megan Williams says

September 6, 2021 at 7:32 am

I’m in WA, in an 8 unit strata. We are insured directly with AAMI. They have been amazing with claims. I set up the policy myself – you do not need to go through a broker.

LVC says

July 17, 2020 at 11:52 am

I am from Victoria but I have found this company helpful and have used them in the past.
CHU

I believe they do WA but not too sure. Anyhow the Victorian branch will be able to assist.

Val P;inzone says

July 17, 2020 at 7:49 am

can you please advise me if it correct that there isl only one company in WA that will insure Survey Strata
group of units ?

- Liza Admin says
  
  July 17, 2020 at 2:49 pm
  
  Hi Val
  
  The following response has been provided by Leonie Milonas, PSC Property Lync Insurance Brokers:
  
  This is incorrect, there is a small number of insurers who will consider insurance for survey strata’s Community Property (CP). However where the individual Lot buildings (some or all) are also insured, this also changes what insurance options are available to you. You would need to seek insurance advice on what options are available to you.
  
  General Disclosure; This above response is prepared for informational purposes only, and is not insurance, financial or legal advice and should not be relied on as insurance, financial or legal advice. You should consult with a qualified insurance or legal advisor. PSC Property Lync Insurance Brokers is an Authorised Representative (AR 1235681) of Professional Services Corporation Pty Ltd (AFSL 305491).

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Question: Can the council of owners remove cover for floorboards from the strata insurance policy to reduce our premium?

Answer: Legislation does not mandate the strata corporation to insure floating floors so the council of owners is entitled to remove this cover.

Question: We are a four lot strata scheme with minimal machinery or equipment. Should we include cover for machinery breakdown in the residential strata insurance?

Answer: We generally recommend considering machinery breakdown insurance if you possess machinery items.

Question: Our strata plan is in a bushfire prone area. Should we consider the appropriateness of our building materials?

Answer: Failure to comply can expose owners corporations to liabilities associated with non-compliance.

Question: Our small self managed scheme arranged new insurance with a company that does not offer strata title insurance. The type of cover is ‘building insurance’. Is this the right insurance for our scheme?

Answer: Given the complexities involved in selecting appropriate strata insurance, I recommend seeking the advice of a reputable Insurance Broker or appointing an SCA (WA) Accredited Strata Manager to assist you with your legislative responsibilities and duties.

Question: One owner has let their lot to a tattoo parlour in our commercial strata plan. This has caused our insurance premiums to increase dramatically, and we are finding it very hard to get insurance. Can we pass on the increase in insurance premium costs to the tattoo parlour?

Answer: In Western Australia, the legislation includes a provision enabling a strata corporation to require an owner to cover additional premiums paid for the strata insurance related to risks on their lot – this would extend to tenants such as tattoo parlours.

Section 98 Notice to member of strata company

Question: Is the electrical wiring in the ceiling of my unit covered by strata insurance?

Answer: We confirm utility services including electrical wiring in a unit is covered along with other permanent fixtures and fittings subject to the policy terms, conditions & exclusions.

Question: I’m the owner of a ground-floor commercial office in a mixed commercial and residential strata complex. 5 wall-to-ceiling plate glass windows form the front wall of the office. Are these windows covered by the strata insurance or by the owner’s insurance?

Answer: Glass being a permanent fixture is covered by a strata policy.

Question: Landlord lot owners in our small scheme make claims for damage caused by their tenants on our strata insurance. This has increased our premium. Shouldn’t they have landlord insurance?

Answer: Strata Insurance covers all items defined as building – it is not possible to get a separate landlords policy to cover building items that the strata policy covers.

Question: Can a lot owner lodge an insurance claim against the Strata Company insurance policy without approval from the Strata Council?

Answer: A lot owner who has contributed to insurance premiums for a policy covering property they own can demonstrate an insurable interest in the policy.

Question: Why have I been referred to my strata manager to make a claim regarding our strata insurance? Surely the insurance company has a claims person.

Answer: A broker will provide advice, whereas the strata manager will generally ensure communication is actively passed to the lot owners and help to follow up matters that need to be acted on.

Question: Is there any obligation for lot owners to have Public Liability Insurance in place for their lot?

Answer: If the owner chooses to not take out insurance it is at their own peril.

Question: Is strata insurance for small strata schemes in WA only available from a hand full of suppliers?

Answer: There are other direct insurers in the market who will provide quotations and insure smaller strata schemes.

Question: Who can be held liable in a Bullying and Harassment case by a tenant in a Strata development? Does the COO need to take out an insurance cover against such claims?

Answer: Under the Strata Titles Act there is no relationship between the strata company and a tenant.

Who can be held liable in a Bullying and Harassment case by a tenant in a Strata development?

Does the COO need to take out an insurance cover against such claims?

Question: If a strata company cancels its insurance in March 2016, can it still lodge a claim against that policy if legal action is commenced within the statute of limitations for something that occurred prior to March 2016?

Answer: There may be no limitation on how far back you can lodge a claim

Question: A lot owner is challenging our strata insurance valuation as being too high

Answer: Ensure you’ve demonstrated that you’ve done your due diligence.

Question: Does the insurance policy require being voted for at an AGM, or is it the responsibility of The Council of Owners? What are our strata insurance requirements in WA?

Answer: The Strata Titles Act 1985 (STA) s127(c), outlines the matters for an AGM.

Question: How far ahead should insurance policies cover? In our AGM in November we will be asked to vote for a new policy that will cover November 2021- November 2022. Are these WA strata insurance requirements?

Answer: Generally an insurance policy is issued as a 12month policy, which expires at 4pm on the expiry day. In advance you may ask an insurer to extend your insurance renewal by a few months, with some insurers not issuing policies beyond 18mths.

Question: We have 4 commercial units in our strata property in Perth. Our insurance has come back extremely high as one of the units is occupied by a high risk business using highly flammable materials etc. Should we all contribute equally to the cost of the insurance?

Answer: The strata corporation is able to adjust the premium payable by a lot owner that fairly represents the proportion of premium payable attributable to activities carried on the owner’s lot.

Question: How many years ahead does a quote for insurance renewal need to be tabled at an AGM?

Answer: An Insurance policy renewal is issued for 12 months generally.

Question: How much should our strata complex be insured for? The current insurance level essentially equates to the value of each unit times the number of units but should risk of damage be taken into account?

Answer: The strata insurance requirements in WA and all states around Australia is that the property is insured for full rebuild value

Question: Can you please highlight any specific changes or strata insurance requirements in WA for where the strata company has mixed use, commercial and residential use.

Answer: Within the act, from my understanding, it doesn’t actually differentiate like that.

Question: I’ve heard there is only one company in WA that will insure Survey Strata groups of units? Is this correct?

Answer: There is a small number of insurers who will consider insurance for Survey Stratas Community Property (CP).

Question: I live in a small strata scheme. I’ve found a cheaper quote with a lower excess. Am I able to insure my unit separately with a different insurer to the other lot owners? What about the common property?

Answer: By having strata insurance, it means that at all times you have consistent insurance in place, both for your home unit and common property areas.

Question: We have been with the same strata insurance company for 10 years. As a lot owner, do I need approval from the other 3 owners to call insurance companies and gather some comparable quote?

Answer: Not all strata insurance products are the same and therefore it’s important when applying for quotes that you have some understanding on how to compare these policies.

Question: What insurance do I need for a strata property? We are looking at purchasing a property that is part of strata that was formed pre 1985. What are our particular strata insurance requirements in WA?

Answer: This depends on whether it is a Survey Strata you’re purchasing or strata single tier.

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