If you own a unit, factory or commercial lot in a body corporate or strata scheme, chances are you’ve asked this exact question:
It’s a fair question.
And it’s one that costs property owners tens of thousands of dollars every year when they assume the wrong answer. Because here’s the truth most people only learn after something goes wrong:
Body corporate insurance is essential but it is not complete protection for you as an owner.
We’re going to walk you through exactly what strata insurance covers, what they usually don’t, where the dangerous grey areas live and why relying on assumptions is one of the biggest risks in property ownership.
This isn’t theory.
This is based on real claims, real disputes and real money lost.
“The body corporate covers everything.”
It doesn’t.
Body corporate (strata) insurance is designed to protect common property and shared assets – not your personal financial exposure as a property owner. That distinction is where most problems begin.
In Australia, strata schemes are legally required to hold insurance under legislation such as legally required to hold insurance under legislation such as the Body Corporate and Community Management Act (QLD) and equivalent Acts in other states.
At a high level, body corporate insurance generally covers:
That sounds comprehensive… until you look closer.
Across most strata policies, cover typically includes:
Building structure and common property
Public Liability (Common Areas)
Machinery Breakdown (Common Assets)
Here’s where the risk lives.
Body corporate insurance does not automatically cover:
Inside Your Lot
In-Unit Machinery and Fixtures
Public Liability Inside Your Unit
If someone is injured inside your lot and the tenant’s insurance doesn’t respond, wasn’t in place or there was a fitout works you were unaware of from the previous tenant, you as the owner can be held liable.
Slip. Trip. Injury. Claim.
That exposure sites squarely with you.
Tenant-Related Risks
Loss of Rent (In Many Scenarios)
Body corporate insurance may only cover loss of rent if the damage is caused by an insured event to common property.
If the loss is due to:
You wear the cost.
Most likely and you should definitely have a broker review the strata documents and tenants insurance/lease to identify any gaps. And not just “some” insurance. If you own a strata property, you typically need additional insurance on top of body corporate cover, such as:
Landlord Insurance (If the Property Is Leased)
Covers:
Contents Insurance (Even for Landlords)
Covers:
Owner Public Liability (Inside the Lot)
Protects you if a tenant or visitor is injured inside your lot and the tenant’s policy has gaps.
This is where we see owners get caught out the most.
Tenant-Installed Fixtures
Air-conditioning units, solar, stairwells, mezzanines often installed after the original lease.
If these are:
They can fall outside both strata and landlord cover.
An owner assumed: “Body corporate insurance has it covered.”
A tenant defaulted and disappeared.
A separate agreement required a tenant-installed stairwell in a common area to be removed at make good and the document was not disclosed to the new property manager or the insurer.
Result?
When the insurance broker was later asked if it could have been covered?
Yes. If it had been structured and disclosedcorrectly.
This is why insurance isn’t just about having a policy. It’s about understanding responsibility.
Commercial strata properties amplify risk because:
This is where professional property management and insurance literacy separate protected owners from exposed ones.
Yes. Body Corporate insurance alone is usually not enough.
If you rely solely on strata cover, you are exposed to:
Understanding where strata insurance stops – and owner responsibility begins – is one of the most important skills a property owner can have. And it’s why informed owners don’t ask if they need insurance….. They ask what gaps still exist.
Our Head of Commercial Management has created a helpful infographic. You can also download it for future reference at a later date.
Insurance Infographic: Body Corporate vs Owner Responsibilities
Disclaimer:
The information contained in this article is provided for general information purposes only and is not intended to constitute legal, financial or other professional advice. Whilst every effort has been made to ensure the content is accurate and current at the time of publication, no warranty is given as to its accuracy, completeness or suitability.
This article does not take into account your particular objectives, circumstances or needs. You should not act or refrain from acting on the basis of any content without obtaining independent, tailored advice from a qualified professional. To the maximum extent permitted by law, Ray White Commercial CSR and its officers, employees and agents disclaim all liability for any loss, damage or liability arising from reliance on, or use of, this article or its contents.
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