Strata insurance: what it covers and who arranges it

What strata insurance is and who needs it

Strata insurance is taken out by the owners corporation or body corporate, not by individual owners. It insures the building and common property and covers the scheme's legal liability if someone is hurt on common property. Owners share the cost through their levies.

The cover is required by law, but the rules sit in state and territory strata legislation and are not the same everywhere.

  • NSW: a scheme must hold building insurance and public liability cover of at least $20 million. A two-lot scheme can go without building insurance if the buildings are detached, no building sits on common property and the owners vote unanimously.
  • Victoria: an owners corporation must hold reinstatement and replacement insurance for buildings on common property and public liability cover of at least $20 million. Two-lot subdivisions are exempt.
  • Queensland: a body corporate must insure common property and body corporate assets for full replacement value and, in most cases, every building that contains a lot. Public risk cover must be at least $10 million.

Other states and territories set their own minimums. Check with the local strata regulator.

What is usually covered, and common exclusions

A residential strata policy normally covers:

  • the building, common property and shared fixtures, at replacement cost
  • removal of debris and professional fees after a loss
  • public liability for common property
  • optional sections such as office bearers' liability, fidelity guarantee, machinery breakdown for lifts, and cover for voluntary workers.

It does not cover what belongs to each owner or tenant. The NSW Government states that the contents of a lot, such as furniture and appliances, are not the responsibility of the owners corporation. Owners need their own contents cover, and investors usually need landlord cover for lost rent and their own liability.

Common exclusions are wear and tear, building defects, damage from poor maintenance, and flood where the scheme has not bought that cover.

How strata insurance is sold

A few insurers sell strata cover directly. Much of the market runs through insurance brokers and specialist strata underwriting agencies, which issue policies on behalf of insurers. A strata manager often collects the quotes and may be paid a commission.

The ACCC's Northern Australia Insurance Inquiry final report (2020) found that about half of strata properties in northern Australia arranged insurance through a broker. The same report raised concerns about commissions paid to brokers and strata managers. In NSW, managing agents must now itemise the base premium, commissions, broker fees and government charges in insurance quotes.

A broker is the usual route for larger buildings, mixed-use schemes, schemes with defects or a poor claims record, and any scheme that has been declined. Brokers and underwriting agencies must hold an Australian financial services licence or be an authorised representative of a licensee. You can check either on the ASIC professional registers.

What makes strata cover hard or expensive to get

  • Known defects, combustible cladding or outstanding repair orders.
  • A history of water damage claims or overdue maintenance.
  • Location in a cyclone, flood or bushfire zone. The ACCC found strata premiums in northern Australia were higher than in the rest of the country.
  • Commercial tenants with higher fire risk, such as restaurants.
  • An out-of-date valuation, which makes it hard to set the sum insured.

The government-backed cyclone reinsurance pool covers residential strata policies, including mixed-use schemes where at least half the floor space is residential.

Questions to ask before buying

  • Is the sum insured based on a recent valuation?
  • Does the policy meet the minimums in our state's strata law?
  • Is flood included, and how is storm surge treated?
  • What are the excesses, especially for water damage?
  • Which fixtures inside a lot are insured by the scheme and which by the owner?
  • How many insurers were approached, and which declined?
  • What commission or fee will the broker and the strata manager each receive?

Where to complain

Start with the insurer's internal complaints process. If a broker or strata manager arranged the cover, raise service problems with them as well. Put the complaint in writing and keep copies. An insurer generally has 30 calendar days to give a final response.

If that does not resolve it, the complaint can go to the Australian Financial Complaints Authority (AFCA), which is free to use and whose rules cover residential strata title insurance. Call 1800 931 678.

Find a licensed broker

Browse businesses licensed to arrange general insurance in your city, or search every state.

Sources

Last checked: 2026-10-06

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