Body Corporate Insurance Explained
What is covered and what is not.
Insurance is one of the most important responsibilities of any body corporate and often one of the least understood. Getting it wrong can leave the entire scheme exposed. This page covers what body corporate insurance includes, what it does not, and how to make sure your building is properly protected. Need a manager who stays on top of insurance? Get 3 free proposals from our partners.
What insurance does the body corporate have to take out?
The body corporate is legally required to insure the building for its full replacement value. This includes the structure, common property, and fixtures. In Queensland, insurance must cover the building for fire, storm, and other risks. In NSW, the owners corporation must insure the building and common property for damage. Public liability insurance is also required or strongly recommended in both states.
What does body corporate insurance typically cover?
A standard body corporate insurance policy covers the building structure, common property fixtures, and liability for injuries on common property. It usually includes cover for fire, storm, water damage, impact damage, theft from common areas, and vandalism. It may also include cover for voluntary workers, office bearers’ liability (for committee members), and machinery breakdown for things like lifts and pumps.
What is not covered by body corporate insurance?
Body corporate insurance typically does not cover the contents inside your individual lot (your furniture, appliances, and personal belongings), nor does it cover tenant damage to individual lots, loss of rental income, or improvements you have made inside your lot. You need your own contents insurance and, if you are an investor, landlord insurance to cover these gaps.
Do I still need my own insurance if the body corporate has a policy?
Yes. The body corporate’s insurance covers the building and common property, not your personal belongings or internal fixtures. You should have your own contents insurance to cover items inside your lot. If you are renting out your lot, landlord insurance is also recommended to cover loss of rent, tenant damage, and liability. Talk to your insurer about what the body corporate policy covers so there are no gaps or overlaps.
What is replacement value and why does it matter?
Replacement value is the estimated cost to completely rebuild the building and common property from scratch, including demolition, professional fees, and compliance with current building codes. The body corporate must insure for the full replacement value, not the market value of the property. If the building is underinsured and a major event occurs, the shortfall must be covered by lot owners out of pocket.
How often should the replacement value be reviewed?
The replacement value should be reviewed regularly, ideally every two to three years, or whenever significant building work is completed. Construction costs increase over time, and an outdated valuation can leave the building underinsured. A professional quantity surveyor or insurance valuer can provide an accurate replacement cost assessment.
Is your scheme properly insured?
A good manager reviews your insurance annually, ensures the replacement value is current, and shops around for competitive premiums. If you are not sure your scheme is covered, compare managers now.
What is public liability insurance?
Public liability insurance protects the body corporate if someone is injured on common property or if common property causes damage to a third party’s property. For example, if a visitor slips by the pool or a falling tree branch damages a car in the car park. The policy covers legal costs and compensation. Most body corporate insurance policies include public liability as standard.
What is office bearers’ liability insurance?
Office bearers’ liability (also called committee liability or directors and officers insurance) protects committee members from personal liability for decisions they make in good faith in their roles. If a lot owner sues the committee for a decision, this insurance covers legal costs and any damages awarded. It is an important protection for volunteers and is included in many body corporate policies.
How do I make an insurance claim?
Report the damage or incident to your body corporate manager as soon as possible. The manager will lodge the claim with the insurer on behalf of the body corporate. You will need to provide details of what happened, when it happened, and any evidence such as photos and witness statements. The insurer will assess the claim and arrange repairs or payments if the claim is approved.
What is an excess and who pays it?
The excess is the amount the body corporate must pay before the insurer covers the rest of a claim. It varies by policy and event type. Storm damage, for example, may have a different excess than water damage. The excess is paid from the body corporate’s funds (admin or sinking fund), not by individual lot owners. Some schemes choose a higher excess to reduce their annual premium.
Can individual lot owners make a claim on the body corporate’s policy?
If damage to your lot was caused by an event covered under the body corporate’s insurance (for example, a burst common property pipe flooding your unit), you may be able to claim through the body corporate’s policy. Report the damage to your manager and ask them to lodge the claim. If the damage is to your personal contents, you will need to claim on your own contents insurance.
Why do body corporate insurance premiums keep going up?
Insurance premiums for body corporates have risen significantly in recent years, particularly in areas prone to storms, flooding, and cyclones. Factors include increased construction costs, rising claims frequency, natural disaster risk, and the overall insurance market cycle. The committee should review the policy annually and consider getting multiple quotes at renewal to ensure the best available price.
Can the body corporate shop around for insurance?
Yes. The body corporate is not locked into one insurer. The committee should review the insurance at the AGM and can instruct the manager to obtain quotes from multiple insurers at renewal. Some body corporate managers have relationships with insurance brokers who specialise in strata insurance. Comparing quotes can save the scheme thousands of dollars a year.
Get a manager who keeps your insurance competitive
The right manager reviews your policy every year, ensures the building is properly valued, and shops around for the best premium. See how it works or get your free proposals now.
Explore more topics
- Fees and Costs – how insurance premiums fit into your levies
- Maintenance and Repairs – when insurance claims intersect with maintenance
- Financial Management – managing insurance within the scheme’s budget
- Compliance and Safety – safety obligations that affect your insurance
Browse all topics on the Knowledge Hub, or meet our management partners.
From the Blog
Practical insights for Queensland Body Corporate and New South Wales Owners Corporations
Why I’m Writing About Body Corporate (From a BDM, Family Man, and Strata Owner)
Why I'm writing about body corporate: insights from 20+ years as a BDM, strata owner, and father of five.
Read the Article →
Primary sources and further reading
The information on this page is drawn from the following primary sources. Use these for the definitive legal position in your jurisdiction.
Queensland
- Body Corporate and Community Management Act 1997 (Qld)
- Queensland Government, Body corporate information
- Queensland Civil and Administrative Tribunal (QCAT)
New South Wales