What is Owners Corporation Insurance and Why Do You Need It?
As a strata owner, you have numerous responsibilities, not only for your specific apartment but for the whole property. Purchasing comprehensive Owners Corporation Insurance is one of the most crucial aspects of managing a strata property.
In this blog, we discuss Owners Corporation Insurance and why every strata owner needs it. Let’s get started!
What is Owners Corporation Insurance?
Often called strata insurance, owners corporation insurance is a specific kind of coverage intended to safeguard common property and communal responsibilities in multi-unit buildings like apartment complexes, townhomes, or commercial properties under the management of an owners corporation (also called a body corporate in certain areas).
Owners corporation insurance is essential for safeguarding property owners’ investments, regardless of whether it is required by law or is seen as a recommended practice in property management. So why do you need this type of insurance? Well, here are compelling reasons why owners corporation insurance is essential.
Why do strata property owners need owners corporation insurance
1. Financial protection
Shared development property owners face financial risks without owners corporation insurance, as they must personally cover damages or legal liabilities from communal incidents. For instance, Owners corporation insurance protects individual owners from substantial financial losses due to damages caused by fires, storms, or flooding in a building.
Additionally, an owner corporation insurance policy spreads risk and mitigates costs for costly repairs on large or multi-story buildings, providing a vital layer of protection against unforeseen disasters.
2. Coverage for common areas
Shared buildings’ common areas, owned collectively by property owners, are at risk of damage, wear, and accidents if not adequately insured, potentially affecting the entire community. Owners corporation insurance safeguards common areas and shared assets from damage, fire, or natural disasters, preventing owners from covering repair or replacement costs out of pocket.
3. Liability protection
Common building areas, such as hallways and shared courtyards, can be at risk of accidents or injuries, potentially leading to legal liability claims. Owners corporation insurance typically includes public liability coverage, safeguarding the corporation financially and effectively handling third-party claims, thereby reducing the risk of extended legal disputes.
Unit owners without insurance may face personal liability for legal fees or damages in shared property incidents, potentially resulting in financial distress and legal complications.
4. Legal requirement
In many jurisdictions, including Australia, the UK, and parts of the US, owners corporation insurance is legally required to insure strata schemes and multi-dwelling developments. Failure to meet these obligations can result in fines, penalties, or financial difficulties for property damage.
5. Protection of building and structural integrity
Owners corporation insurance covers damage to building structures, including walls, foundations, roof, and fixtures, in events like fire, storm, flood, or vandalism, ensuring repairs or rebuilding without financial strain. This type of insurance often covers temporary accommodation costs in uninhabitable buildings, such as apartment blocks destroyed by fire, to cover residents’ costs while repairs are made.
6. Peace of mind
Finally, owners company insurance give everyone who owns property peace of mind. Owners can feel assured that in the event of a tragedy or accident, they won’t have to deal with excessive expenses or complicated legal issues because the building and common property are protected. Additionally, as prospective investors and buyers are more likely to be attracted to well-maintained, appropriately insured properties, it helps to increase the property’s value.
