Do You Need Home Insurance if You Have Strata Insurance?

One of the biggest sources of confusion for strata owners is determining where the body corporate's insurance responsibility ends and their own begins.

If you pay strata fees, do you need your own Home Insurance policy?

The answer is generally yes, but typically you will only need Contents Insurance to cover your household and personal items.

Strata insurance covers the building's structure and common areas and excludes everything inside your individual unit.

Without your own contents insurance policy, you would be financially responsible for any loss or damage to your personal belongings, such as furniture and appliances, as well as your apartment’s internal fixtures like carpets and blinds which your strata policy may not cover.

Your own contents policy will also provide cover for legal liability if you are found to be legally responsible following an accident. The strata policy will likely not cover you for any legal liability that happens inside your unit or away from the site.

To ensure you aren't underinsured, or paying for cover you don't need, it’s crucial to understand the difference between Strata and Home Insurance policies and their split in responsibilities.

The body corporate (owners corporation or strata managers) are responsible for arranging the mandatory Strata Insurance. The cost for this is typically included in your quarterly strata levies.

Generally, Strata Insurance covers the building structure, which includes the external walls, roofing, floors, and structural elements of your apartment. It also covers common areas like shared driveways, lifts, pools, gardens, and hallways, as well as common property liability to cover any accidents that may happen in shared zones such as a visitor slipping and breaking a bone in the foyer.

Note: Budget Direct does not offer Strata Insurance. This is purchased by your strata manager or committee.

You are responsible for arranging contents insurance to protect the contents inside your unit and your risk of legal liability. Contents Insurance is recommended so your personal belongings including your furniture, electronics, clothing, jewellery and appliances are covered. Read more on what’s covered under Budget Direct’s Contents Insurance in the Product Disclosure Statement (PDS).

Your Contents Insurance will also provide legal liability cover for unfortunate accidents that may occur inside your unit or away from the property.

One of the most common mistakes strata owners make is assuming the body corporate insurance covers everything attached to the building — frequently this is not the case.

Some strata insurance policies only cover the structure up to the internal paintwork. This can vary from state to state so it is important to check with your body corporate what the strata insurance policy covers.

This means if a pipe bursts causing water damage throughout your entire unit, the strata insurance may repair the pipe and the structural damage to the building, but it may not cover the replacement costs for your water-damaged carpets, floating floorboards or contents.

If you are a landlord and have tenants living in your strata unit you may need to consider the following that may not be covered by the strata insurance or a standard contents insurance policy:

Legal Liability - While strata insurance may provide protection for legal liability cover for accidents that happen on the common areas of the strata unit, you may need to have a separate contents insurance policy to cover you from a legal liability point of view for accidents that could happen inside your unit.   

Loss or Rent

• From an insured event - Consider if your insurance coverage will include loss of rent if your tenant stops paying rent, as a result of your unit becoming unliveable from an insured event covered by the policy.
• Tenant default - If your tenant stops paying rent or leaves without giving notice; you may be able to add optional cover to protect you against this type of loss of rent.

Malicious Damage and Theft - A standard contents policy may exclude malicious damage and theft from your tenant or their visitors. You may be able to add on optional cover to protect you against this type of loss.

When determining what cover you need, it depends on the type of property you own and your living arrangement.

When it comes to strata schemes there is no one-size fits all approach. As each insurance policy is tailored differently, it’s best to follow the below steps. Before you buy insurance, you should:

• Request a copy of the Certificate of Currency and the policy wording (Product Disclosure Statement) from your Body Corporate manager to see exactly what the building policy covers (specifically regarding internal fixtures like paint and floors).
• Assess the value of your contents, ensuring you include the replacement cost of carpets, blinds, and light fittings if they aren't covered by the strata insurance. If you’re unsure how much the value of your contents is, you can estimate a close figure using our Contents Insurance Calculator.
• Get a quote from Budget Direct Contents Insurance to help compare the cost of ensuring your personal assets are protected against fire, theft, storm, and accidental damage.
• If you are a landlord consider if you need to include the landlord optional covers of Tenant Default or Tenant Theft and Malicious Damage.