Is insurance compulsory for strata schemes?

In Queensland, a body corporate is obliged to hold three types of insurance:

• Public risk insurance
• Insurance for common property and body corporate assets
• Building insurance determined by the plan format of the property; that is, building format (a typical high-rise) or standard format (usually low-rise with some or no shared walls).

Public risk insurance

Public risk insurance must cover the common property and the body corporate assets where it is practical to have public risk insurance, such as pool furniture and gym equipment.

Coverage must be at least $10 million for a single event and at least $10 million for a single period of insurance, covering claims for death, illness or injury.

Common property, body corporate assets and building insurance

The common property, body corporate assets and buildings must be insured for damage (to the greatest practicable extent) for full replacement value and any costs associated with reinstatement or replacement of the assets or buildings.

Damage extends to:

• earthquake, explosion, fire, lightning, storm, and water;
• glass breakage; and
• damage from impact, malicious act, and riot.

For building insurance, the following are NOT included:

• temporary wall, floor or ceiling coverings, or carpet;
• fixtures that can be removed by a lessee or tenant at the end of a lease or tenancy;
• mobile or fixed air-conditioning units servicing 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.

Under standard format plans, owners are responsible for insuring their own buildings if there are no common walls with another building. However, owners can join a voluntary shared insurance scheme taken out by the body corporate on their behalf.

Further reading

• What disclosure obligations does a strata committee have regarding scheme insurance?
• Is flood insurance compulsory in a body corporate?
• Responsibility for lot damage does not hinge on insurance
• Who is responsible for building insurance?
• Body corporate insurance webinar
• Body corporate insurance obligations