Insurance for Common Property & Your Lot Explained

Strata Title Common Property Ownership

As an Owner you have an undivided share of common property. This means you, along with all other Owners of your scheme are responsible for any liabilities that arise from common property ownership. A Strata Company is an unlimited liability company.

Strata Titles Act 1985 WA

The Western Australia Strata Titles Act 1985 (STA) outlines the insurance responsibilities of a Strata Company in Section 53 & 54. The Strata Company shall insure the “building” for the Replacement value, including all fees, charges removal of debris costs and hold a minimum of $5m legal liability insurance. Workers Compensation insurance is required where a Strata Company employs workers, either directly or indirectly as contractors. Refer to your broker to determine your requirements here.

Other insurance is discretionary, however risks are changing and increasing and many discretionary covers are now standard sections in a Strata Insurance policy.

A Strata Company is responsible to ensure the insurance is arranged as mandated by the STA. Building definition Section 53 The STA describes the definition of “building”; includes any building on the parcel for a scheme, whether shown on the strata/survey-strata plan or not and also includes —

(a) proprietors’ improvements and proprietors’ fixtures forming part of the building including paint and wallpaper but excluding carpet and temporary wall, floor and ceiling coverings.

Building as defined in the STA includes Proprietors fixtures and fittings or structures that are fixed to, or forming part of the building, which include inside or outside a Lot.

Proprietors (Owners) Fixtures and Fittings

As an Owner it may be difficult to define personal contents and what is a fixture. A rule of thumb is if it is attached or fixed to the building, it’s a fixture of the building. If you can pick it up and take it with you, it’s personal contents.

A strata manager manages common property. Their duties do not extend inside a lot for maintenance, other than to enforce the by-Laws and arrange repairs on a Lot boundary that impacts common property or other units, such as a leaking shower drain which causes water ingress to a unit below.

In summary Strata Insurance extends limited cover inside your Lot only for what forms part of the building structure as defined by the STA for resultant damage from accidental damage or perils covered by the policy, not your removable contents, as referenced above and illustrated in the table in this pdf document

Commercial Fixtures

When it comes to commercial strata temporary fixtures (i.e. shop fit outs) that are installed inside a Lot and attached to the building, if they are removable at the end of the lease agreement, then these fixtures are not covered by strata insurance, as not defined as part of the building.

Carpets

The STA specifically excludes carpets or other temporary floor, wall or ceiling covering, found inside a Lot. Therefore typically Strata Insurance policies will not cover these items either. The Owner needs to ensure their contents insurance covers these items. *Note that carpets or other fixtures found in Common Property are covered.

What does an Owner need to insure?

Things not covered by strata insurance and including: Removable contents and chattels for e.g. furniture, personal belongings temporary fixtures, like floating floors and carpets etc. as contents insurance.

Your Legal Liability Exposure

As an Owner you also have Legal liability exposure arising out of the use of your Lot. Whether you live in your Lot or you lease your property to a tenant, it is important to ensure that you have insurance protection. Generally when you buy residential contents insurance or Landlords insurance, both policies will provide cover for legal liability insurance.

Does your tenant need insurance?

A tenant living in strata should have contents insurance for themselves, similarly to cover their own contents, but also their legal liability. A tenant can become liable to the Strata Company for negligent claims that encroach beyond the confines of the Lot and extend into common property.

Other Insurance Responsibilities Refer to other Strata Insurance knowledge flyers. General Disclosure This article has been prepared for informational purposes only, and is not legal advice and should not be relied on as legal or insurance advice. You should consult with a qualified insurance or legal advisor.