you asked

31 Oct You asked about body corporate insurance.

You asked about body corporate insurance.

Owner Question: The body corporate insures my unit doesn’t it?

Answer:  Not entirely!

A body corporate must have insurance for:

  • common property
  • body corporate assets
  • public risk
  • every building that contains a lot.

 

The insurance a body corporate must have is affected by the type of survey plan the scheme is registered under. The 2 common types of survey plan are:

  • building format
  • standard format.

Schemes that are registered under a building format plan of subdivision are usually multi-storey buildings like blocks of residential units. Some townhouses can also be registered under a building format plan of subdivision. In this type of scheme, a body corporate must insure (for the full replacement value) each building that contains an owner’s lot (e.g. a unit or apartment).

Schemes are usually registered under a standard format plan of subdivision if they are low-rise developments. An example is a townhouse complex where there is a building on each lot with a backyard or courtyard. The body corporate must insure (for the full replacement value) each building that shares a wall with another building (known as a common wall).

The lot owner is responsible for insuring their own building if it is:

  • free standing—does not share a common wall with another building

and

  • registered under a standard format plan.

The building insurance which a body corporate takes out must cover:

  • damage to the building
  • other costs to reinstate or replace the insured buildings (e.g. professional fees and costs for removing debris).

Under the insurance policy the property must be returned to new condition. The body corporate can take out extra building insurance for things like floods. A motion to do this would have to be passed by ordinary resolution at a general meeting.

To further clarify the definition of building is as follows:

A ‘building’ includes any improvements made to the building and fixtures added to the building. It does not include:

  • temporary wall, floor and ceiling coverings, carpets
  • fixtures that can be removed by a lessee or tenant at the end of a lease or tenancy
  • mobile or fixed air conditioning units for a particular lot
  • curtains, blinds or other internal window coverings
  • mobile dishwashers, clothes dryers or other electrical or gas appliances that are not wired or plumbed in.

Therefore owners need to ensure that they have insurance for the above items, contents insurance and in some cases landlords insurance will also me required.

When determining what additional insurance you require for your unit we recommend that you talk to a licensed insurance professional.

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