Body corp insurance – better cover than you might expect!
Ever wondered where all your body corp fees go?! Insurance is usually one of the major expenses, but few of us understand where the line is drawn between the apartment owner’s personal cover and the policy paid for by all owners through the body corp. We’ve called in one of the experts to help – and the answer might pleasantly surprise you!
While the legal boundary between your apartment (lot) and the common property is typically half way through your walls, the body corp’s insurance goes a whole lot further. Direct Insurance Broker’s Matt Dawson explains: ” In order to understand what the compulsory body corporate policy covers, we need to examine the meaning of “building”, as defined by strata legislation.
A building includes improvements and fixtures (excluding carpet), but DOES NOT include:
- temporary wall, floor and ceiling coverings
- fixtures removable 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 not wired or plumbed in.
Therefore, anything that isn’t considered “building” is the responsibility of the unit owner.”
Matt says it’s common for owners to pay for their own damage inside their apartment when they should be contacting their body corp. We know from our experience chasing repairs and claims for our landlords as Brisbane property managers that some body corp managers like to duck and weave from the work involved. The common reply: “That’s the apartment owner’s responsibility”.
Matt gives examples when an apartment owner might pay themselves without realising they’re covered: “A split system air conditioner malfunctions causing water damage to the gyprock wall underneath. The air conditioner would need to be claimed under owner’s contents, however the water damaged wall would be claimable under the body corporate policy. In another example, a fire starts in the kitchen, causing severe damage to the laminate benchtop and some of the overhead cupboards. This is all covered under the body corporate policy.”
If you’re reading this wondering how many claims you’ve missed out on over the years, you’re not alone! Very little info is shared on this important topic and the government website has just a brief page on body corp insurance.
“A tenant complains to the owner about pulls in the carpet inside their unit, which is about 10 years old and badly needing replacement. The owner does nothing to repair the carpet, and one day the tenant trips and falls through their glass coffee table, leaving them blind in one eye. The tenant sues the owner for negligence, which the owner claims under their landlord’s policy.”
“Public Liability insurance covers the insured party against any claims brought against them for personal injury or property damage. By law, the body corporate must have at least $10 Million cover, however each owner in the complex should also have liability protection. The body corporate liability is meant to cover the “building” and common areas, however there’s also a risk inside each lot. Therefore, by taking a contents or landlords policy, you should automatically receive liability protection, so in the event of a claim, all parties are protected.”
Of course this article is general information only and you should seek professional advice for your own situation. But please don’t accept that ‘auto-reply’ next time your body corp manager tries to tell you the damage inside your apartment is your problem!