If you own a unit or apartment within a body corporate scheme, you might assume that the body corporate’s insurance fully protects your property. However, this is a common misconception that can leave owners exposed to financial risk. While body corporate insurance provides coverage for the building’s structure and common areas, it does not extend to everything inside your unit or personal liability matters.
Understanding the difference between body corporate insurance and personal home insurance is essential to ensure you have adequate protection.
What is Body Corporate Insurance?
Body corporate insurance is a policy arranged by the owners’ corporation (also known as a strata committee) to cover shared property within a unit complex, apartment building, or townhouse community. This type of insurance is a legal requirement for strata-titled properties and is funded by the levies paid by unit owners.
What Does Body Corporate Insurance Cover?
The specific coverage of a body corporate policy can vary depending on the insurer and the property’s strata agreement. However, it generally includes:
- Building Structure – Covers the external walls, roof, and other fixed components of the building.
- Common Property – Includes shared spaces such as hallways, stairwells, lifts, foyers, gardens, and recreational areas.
- Public Liability – Provides protection against claims if someone is injured in a common area.
- Major Structural Repairs – Covers damage to the building caused by events such as fire, storm, or natural disasters.
Since body corporate insurance is designed to protect the shared interests of all owners, it does not extend to personal belongings or certain parts of individual units. This is where personal home insurance becomes important.
What Body Corporate Insurance Does NOT Cover
While body corporate insurance provides essential coverage for shared property and structural components, it does not protect everything inside your individual unit. Many owners mistakenly assume they don’t need additional insurance, only to discover gaps in coverage when an issue arises.
What Body Corporate Insurance Typically Excludes:
- Internal Unit Damage – Fixtures, fittings, and improvements inside your unit, such as carpets, kitchen appliances, and built-in wardrobes, are usually not covered.
- Personal Belongings – Items such as furniture, electronics, clothing, and jewellery fall outside the scope of body corporate insurance.
- Accidental Damage or Theft – If someone breaks into your unit or accidentally damages something inside, body corporate insurance won’t cover the loss.
- Tenant-Related Issues – If you rent out your property, body corporate insurance does not protect against tenant damage, loss of rent, or liability claims from renters.
- Temporary Accommodation Costs – If your unit becomes uninhabitable due to a disaster, body corporate insurance typically won’t cover alternative accommodation expenses.
Since these exclusions can leave owners financially vulnerable, it’s important to consider additional insurance options to cover these risks.
Why You Might Still Need Home Insurance
Even though body corporate insurance covers the building and common areas, it does not provide complete protection for unit owners. To protect your personal property and financial interests, additional insurance may be necessary.
Types of Insurance to Consider:
1. Contents Insurance
If you live in your unit, contents insurance can protect:
- Furniture, appliances, and electronics;
- Clothing, jewellery, and personal items;
- Fixtures and fittings (e.g., carpets, curtains, built-in cabinetry);
- Accidental damage or theft inside your unit.
This insurance ensures that your personal belongings are covered in case of unexpected damage, break-ins, or other events not covered by body corporate insurance.
2. Landlord Insurance
If you rent out your unit, landlord insurance can provide protection for:
- Tenant-related damage (malicious or accidental);
- Loss of rent due to tenant default or property damage;
- Legal liability if a tenant or visitor is injured inside your unit.
Without landlord insurance, you may be responsible for costly repairs or lost income if a tenant causes damage or fails to pay rent.
3. Strata Gaps and Optional Cover
Some owners may also consider strata gap insurance, which helps cover areas that fall into a grey zone between personal and body corporate responsibility. This is especially useful if your body corporate policy has limitations or exclusions that could leave you exposed.
Why It’s Worth Considering Extra Coverage
Even if your body corporate insurance covers the basics, gaps in protection could leave you financially exposed in case of theft, accidental damage, or tenant-related issues. Reviewing your personal risk and taking out the right insurance policy can provide peace of mind and financial security.
Legal and Practical Considerations
Understanding the legal and practical aspects of home insurance can help you make an informed decision about your coverage. Therefore, while body corporate insurance is mandatory for strata properties, additional home insurance may be necessary depending on your circumstances.
Mortgage Requirements
- If you have a mortgage, your lender may require you to take out additional home insurance to protect their financial interest in your property.
- Some lenders specify minimum coverage levels that go beyond what body corporate insurance provides.
Variations in Body Corporate Policies
- Not all body corporate insurance policies offer the same level of protection.
- Some policies may have high excess fees, meaning claims for minor damage may not be worthwhile.
- Policies may also exclude certain types of structural damage, particularly for older buildings.
Reviewing Your Coverage
To avoid unexpected costs, it’s essential to:
- Request a copy of your body corporate’s insurance policy and read the fine print;
- Check for exclusions or limitations that may require you to take out additional coverage;
- Consider speaking to an insurance expert or legal professional to ensure you are adequately covered.
A lack of personal insurance could leave you responsible for costly repairs or replacement expenses if something goes wrong. Taking the time to review your options can help prevent financial setbacks.
How Astraea Law Can Help
Navigating body corporate insurance can be complex, especially when disputes arise over coverage responsibilities. Astraea Law provides expert legal guidance to help property owners understand their rights and obligations under body corporate agreements, review and interpret insurance policies to identify coverage gaps, resolve disputes between owners, tenants, and body corporate committees, and ensure compliance with legal and contractual requirements for strata properties. If you need legal advice on body corporate insurance or assistance with a dispute, Astraea Law is here to help. Contact us today to discuss your situation and protect your property investment with confidence.
