Who Is Responsible? Understanding Strata Insurance Claims for Lot Owners and Body Corporates
When damage occurs in a strata property, one of the first questions is often:
Who is responsible for fixing it, the lot owner or the body corporate?
The answer is not always straightforward.
Insurance responsibilities in strata can involve the owners corporation or body corporate, individual lot owners, strata managers, insurers and other parties. To make matters more complicated, strata insurance requirements vary between Australian states and territories, meaning the responsibilities that apply in one jurisdiction may not apply in another.
For anyone involved in strata, from lot owners and committees to strata managers and insurance brokers, understanding where these responsibilities sit can help prevent delays, disputes and confusion when a claim arises.
Strata insurance responsibilities vary across Australia
No single set of strata insurance rules applies nationally.
Each state and territory has its own legislation governing strata schemes, including requirements around insurance, building cover and the responsibilities of owners corporations or equivalent bodies.
For example, in NSW, the owners corporation is generally responsible for insuring the building, with mandatory building and public liability insurance requirements applying to strata schemes. NSW legislation also sets requirements around the amount and nature of building insurance.
In Queensland, the position can depend on the type of survey plan under which the scheme is registered. For a building format plan, the body corporate generally insures each building containing a lot for its full replacement value. However, for certain standard format schemes, an owner may be responsible for insuring a freestanding building that does not share a common wall.
Victoria takes another approach. Owners corporations are generally required to hold reinstatement and replacement insurance for buildings on common property, along with public liability insurance, subject to specific exceptions. Individual lot owners can also arrange additional insurance for their own interests.
A responsibility that appears straightforward in one state may be treated differently in another. Any assessment of a strata insurance claim should therefore consider the legislation applying to the particular scheme, as well as the strata plan, policy wording and circumstances of the loss.
Body Corporate vs Lot Owner: Who Is Responsible?
The Body Corporate or Owners Corporation
Depending on the jurisdiction and scheme structure, the body corporate or owners corporation may be responsible for:
arranging mandatory strata insurance
insuring the building or relevant structural elements
insuring common property
maintaining required public liability cover
managing the insurance policy and claims relating to insured property
using insurance proceeds in accordance with applicable legislation.
For example, NSW requires the owners corporation to insure the building and maintain that insurance, while Queensland's requirements can differ depending on the type of plan.
The owners corporation may also engage a strata manager to assist with obtaining and administering insurance. In NSW, for example, strata managers can be delegated responsibilities including obtaining and renewing insurance and making insurance claims.
The Lot Owner
Lot owners generally have responsibility for protecting their own personal property and insurance interests that fall outside the strata policy.
This can include:
contents
furniture and personal belongings
certain improvements or fixtures, depending on the jurisdiction and policy
landlord-specific risks where the property is rented
other items specifically excluded from the strata policy.
NSW Government guidance, for example, makes clear that personal contents are not the responsibility of the owners corporation and recommends owners consider their own contents insurance.
Victoria similarly recognises that individual lot owners can arrange insurance for destruction or damage to their lot or their interest in common property.
The important point is that owning a lot does not mean every item within that lot automatically falls under the owner's insurance, nor does the existence of strata insurance mean everything within a lot is covered.
The applicable legislation and policy wording need to be considered.
Insurance responsibility does not always mean claim responsibility
Another important distinction is between who is responsible for maintaining or insuring something and who needs to manage the claim.
A strata policy may cover particular building elements, but a claim can still raise questions about:
whether the damage was caused by an insured event
whether an exclusion applies
whether the relevant property falls within the policy
whether the loss exceeds the policy excess
whether the insurer's assessment accurately reflects the extent of the damage
whether additional costs are recoverable under the policy.
This is where seemingly straightforward strata claims can become complicated. Early claims advice can help clarify responsibilities, identify potential coverage issues and determine what evidence may be required before the claim progresses.
When Strata Claims Become Complex
Strata insurance claims often involve multiple parties with different responsibilities and interests, including lot owners, strata managers, owners
corporations or body corporates, insurers, loss adjusters and technical experts.
For straightforward losses, a strata manager or body corporate may be able to coordinate the claim through the usual insurance process. More complex claims can require a more detailed approach, particularly where questions arise around responsibility, policy interpretation, causation, repair scopes or the adequacy of an insurer’s assessment.
In these circumstances, clear evidence, careful assessment and a structured claims process can help identify issues early, reduce unnecessary delays and ensure the claim is properly supported.
Getting Responsibility Right Before a Claim Becomes a Dispute
Strata insurance responsibilities are not always straightforward. They can vary between states and territories and depend on the structure of the scheme, applicable legislation, policy wording and the circumstances of the loss. Understanding these factors early can help reduce delays, clarify responsibilities and ensure the claim is supported by the right evidence.
At Pharos Loss Management, we support lot owners, body corporates and strata managers with complex insurance claims, from claim preparation and technical evidence through to insurer negotiations.
If you’re dealing with a disputed claim or are unsure where responsibility sits, contact our team for a confidential discussion about your options.
Pharos Loss Management
+61 478 087 092
Disclaimer: Any comments regarding policy reviews or checking insurance policies before a loss are provided from an insurance claims perspective only. If you are unsure about the adequacy of your cover or the distinction between your policy and a strata policy, you should seek advice from a licensed insurance broker authorised to provide financial advice on general insurance products.
Comments