Do I Need Home Insurance If I Have Body Corporate?
Quick Answer / Executive Summary
Usually yes, in the form of contents insurance. Body corporate (strata or owners corporation) insurance covers the building, common property and the scheme's public liability, but it generally does not cover your belongings, some internal items depending on the state, or your personal liability inside your lot. Owner-occupiers typically add contents cover and investors add landlord insurance. See the homeowners and property insurance guide for how this compares with leasehold and US condo structures.
Key Takeaways at a Glance
- Body corporate insurance protects the shared building, common property and the scheme's liability - it is funded through your levies and arranged by the scheme, not by you.
- It generally excludes your furniture, appliances, clothing and valuables, plus your personal liability for incidents inside your lot, so owners typically buy contents cover.
- Some items such as carpets, curtains, light fittings, air conditioners or floating floors are treated differently by state and by insurer, so check whether the scheme's policy includes them or your contents policy must.
- If a claim affects only one lot, that lot owner may be asked to pay the excess, and a leak that starts in your unit can make you responsible for the neighbour's claim.
- Investors who rent out a lot generally need landlord insurance for loss of rent, tenant damage and liability that the scheme policy does not provide.
What Body Corporate Insurance Actually Covers
The scheme must insure the building and common property for its replacement value, and it carries public liability cover for injuries or damage in shared areas. It typically responds to fire, storm, water damage and vandalism affecting the structure. The insurance is a requirement of the scheme's legislation, which varies by state and territory, and its cost is included in the levies you already pay. Because it is a single policy for the whole scheme, there is one insurer to deal with when a building claim arises.
What It Leaves Out
The scheme policy is not designed to protect what belongs to you personally. That means contents such as furniture, electronics and clothing, some internal fixtures or improvements depending on your state and the scheme's policy, and your personal liability if someone is hurt inside your lot or you cause damage to a neighbour. If you have no contents policy, you personally pay to replace or repair everything inside your unit that the building policy does not cover, which after a fire or burst pipe can be a very large number.
Excess, Leaks and the Neighbour Problem
Where an insured event affects a single lot, legislation in several states allows the scheme to recover the excess from the lot owner concerned, unless the scheme decides that is unreasonable. If damage results from the scheme failing to maintain common property, the scheme would normally bear the excess. If your unit leaks into the one below, the owner responsible for maintenance is typically the one asked to pay. Your contents policy usually includes personal liability, which is the layer that responds when you are found responsible.
Choosing the Right Personal Policy
Owner-occupiers usually want contents insurance, with a sum insured based on an honest room-by-room inventory - the Renters Insurance Coverage Calculator works well for this even if you own the unit. Investors should compare landlord insurance. If you own a house in a community scheme with your own building, you may need building cover as well, so confirm the boundary with the scheme's by-laws. It is the same principle as leasehold flats in England and Wales: the shared policy covers the shared structure, and you insure the layer that is yours.
What You Should Do: Step-by-Step Action Plan
1
Ask the body corporate manager for the certificate of currency and a summary of what the scheme policy covers.
2
List which internal items (floor coverings, fixtures, air conditioning) the scheme policy excludes in your state.
3
Take a room-by-room inventory and buy contents insurance sized to it, with personal liability included.
4
If you rent the lot out, get landlord insurance in addition to the scheme policy.
5
Check who pays the excess for single-lot claims under your scheme's rules before a claim happens.
Critical Mistakes to Avoid
- Assuming the levy you pay means your belongings are insured.
- Skipping personal liability cover for incidents that start inside your lot.
- Forgetting that floor coverings and certain fixtures may fall on your contents policy.
- Investors relying on the scheme policy for loss of rent or tenant-related risks.