Owners corporation insurance is the Victorian name for what other states call strata or body corporate insurance. The owners corporation, not the individual owner, holds the policy over the building and common property. Victoria has its own terminology, some developments carry more than one owners corporation, and cladding has changed the insurance conversation for a group of apartment buildings. This guide sets out the practical questions for committees, managers and owners. For the cover itself, see our strata insurance page.
Victorian Terminology in Plain Terms
- Owners corporation (OC). All the lot owners on a plan of subdivision acting together. Victoria previously used the term body corporate.
- Plan of subdivision. The registered plan showing the lots, the common property and their boundaries.
- Common property. Parts of the development not within a lot, such as driveways, foyers, lifts, gardens and, depending on the plan, parts of the building structure.
- Lot liability and lot entitlement. Lot liability generally sets each owner’s share of the OC’s expenses, including the insurance premium. Lot entitlement generally sets each owner’s share of ownership of the common property.
- Committee. Owners elected to act for the OC between general meetings.
- Manager. A professional OC manager engaged to handle administration, which commonly includes insurance renewals and claims.
- Rules. The OC’s rules, covering use of common property and conduct within the development.
Layered and Multiple Owners Corporations
Larger developments can have more than one owners corporation on the same plan. A mixed-use building might have one OC for the whole site and others for the residential tower, the retail podium or the car park. Each may carry its own policy, or the building may be insured under a single policy arranged by one OC and shared between them.
Where there are several OCs, three questions need settled answers: which OC insures which parts of the building, whether the policies together insure the whole structure without gaps or double-ups, and how the premium is shared. The plan of subdivision and any agreements between the OCs are the documents to check. A manager or broker should be able to show you how the layers fit together, in writing.
Owners Corporation Insurance: What the OC Insures
Victorian legislation sets out the insurance an owners corporation must hold, and the obligations can differ with the size and type of OC. Those requirements change from time to time, so check the current legislative requirements for your OC rather than relying on a general rule. A typical OC policy is built from sections for the building, public liability, office bearers’ liability, fidelity, voluntary workers and machinery breakdown for lifts, pumps and gates. Our residential strata insurance page sets out those sections in more detail.
Townhouse and house-lot subdivisions deserve a specific check. Where each building sits within its own lot and there is little or no building on common property, whether the OC or each owner insures those buildings depends on the plan, the rules and the current legislative requirements. Do not assume the OC policy extends to your roof until someone has confirmed it.
What Lot Owners Insure
- Contents and, depending on the plan and the policy wording, fixtures such as floor coverings, blinds and light fittings.
- Improvements an owner has made, such as a new kitchen or bathroom. Tell the manager when work is finished so the OC can consider whether the building sum insured needs to change.
- Landlord cover for loss of rent and tenant damage, which an OC policy is not generally designed to provide.
- Liability inside the lot. The OC’s public liability is designed around common property.
Cladding
Combustible cladding is now a standard underwriting question for Victorian apartment and mixed-use buildings.
- Disclosure. Insurers commonly ask whether the building has external cladding, what type it is and whether it has been assessed. Answer from the documents on file, not from memory.
- Reports. Keep cladding audits, fire engineering reports, building notices or orders, and rectification plans together, and send them with the renewal.
- Terms. Where combustible cladding is present, insurers may apply higher excesses, special conditions or exclusions, may offer reduced capacity, and in some cases may decline to quote.
- Rectification. Document completed works with certification. A rectified building can present quite differently at the next renewal.
- Works insurance. Rectification projects commonly need contract works insurance. Confirm whether the builder or the OC is arranging it before works start.
Whether your building falls within a government rectification program is a question for your manager and the relevant authority.
Valuations
The building sum insured should reflect the full cost of rebuilding today, including demolition and removal of debris, professional fees, authority requirements and the cost increases that occur over a long rebuild. A rebuild would need to meet current building requirements, so the valuation should reflect compliant materials, not simply what is on the building now. That matters for clad buildings in particular.
Requirements about valuations can apply to OCs, and they change, so check the current legislative requirements. Between formal valuations, ask your valuer whether an indexation adjustment makes sense. Our guide to strata insurance valuations works through the components.
The Manager’s Role
The manager usually runs the insurance process, but the decisions belong to the OC. Typical manager tasks include:
- Obtaining renewal terms and presenting them to the committee or general meeting.
- Passing on the disclosure information the OC holds: defects, claims, works, cladding reports and changes in use.
- Lodging claims and coordinating assessors and repairers.
- Keeping the certificate of currency available for owners, lenders and buyers.
- Explaining any commission or other payment connected with the insurance, so the committee can see how the manager is paid.
Committees should read the policy summary, not just the premium. Ask what changed from last year: sums insured, excesses, exclusions, and sections added or removed.
Disclosure at Renewal
Beyond cladding, tell the insurer about known defects and water ingress, claims and incidents since the last renewal (including those below the excess), short-term letting, commercial tenancies, and major works such as roof replacements or lift upgrades. Repeated leaks are worth special attention; our guide to strata water damage explains how they affect a scheme.
Common Questions
Does the OC policy insure my apartment’s contents?
Generally not. Contents, and in some cases fixtures and improvements, are for the owner’s own policy. Tenants need their own contents insurance.
Who pays the excess when a leak starts inside my lot?
It depends on the rules, any OC resolution, the cause of the damage and the current legislative requirements. Ask your manager how your OC handles it before a claim, not during one.
Can the committee ask for terms from a different broker?
The OC decides how its insurance is arranged. Ask your manager how the committee can request alternative terms, and compare the cover, not only the price.
Talk It Through
Request a strata quote or call 1300 983 940 and we will review your strata insurance against how the development is actually set up, including layered OCs and any cladding history.
General advice only. This article does not take your objectives, financial situation or needs into account. Consider the relevant PDS and Target Market Determination before deciding on a policy.