Both the Commissioner for Body Corporate and Community Management in Queensland, and the Insurance Council of Australia, provide excellent information about how to manage the costs of strata insurance.

The Insurance Council of Australia has released:

• the strata owner’s fact sheet; and
• the strata owner’s check list.

While they are more general in nature, and aimed at providing information for strata owners across Australia, these publications contain useful information in relation to what you can expect and how to manage the insurance process.

Of particular use to owners in Queensland are the fact sheets released by the Commissioner on:

• insurance obligations; and
• tips to reduce insurance premiums.

The first fact sheet contains valuable information about what the statutory insurance obligations in Queensland are. When you understand what insurance must be maintained (compulsory insurance) and what insurance may be maintained (voluntary insurance) you are better able to consider competing policies. That will lead to an informed discussion, usually at Committee level, as to the pros and cons of the various types of voluntary insurance. Particularly, whether voluntary insurance will assist with the risks that the Body Corporate can reasonably expect, in its situation and with its peculiarities.

The Commissioners fact sheet with tips to reduce insurance premiums is a good way to finish the insurance process. That is, after understanding the compulsory insurance obligations, deciding which voluntary insurance is desirable and obtaining quotations for policies that cover those risks, a Body Corporate Committee can then consider each one of the Commissioners tips to try and drive the price of the insurance down.

It’s also critically important to understand what insurance will not cover. A straight forward example is damage to your building arising from an occupier’s failure to maintain their property. Body Corporate managers have told us that in the last year or so one of the most common insurance claims is for water damage to a unit, and typically at least the unit below, from a burst washing machine hose. A washing machine hose is usually under pressure at all times (you leave the taps on and the washing machine controls the flow of water into the machine). That means the hoses will eventually fail. They are an easily replaceable item which do not require a plumber to fit and can be purchased at a regular hardware store for somewhere around $30 a hose.

Insurers can, and are, denying claims based on burst hoses that have failed over time. A switched-on Body Corporate Committee, or Body Corporate Manager, would raise this, along with a number of other similar issues, as part of an annual maintenance checklist for owners.

By following the processes above you should not only reduce the cost of your strata insurance, you’ll also reduce the number of un-insured events.

This article was contributed by Michael Kleinschmidt, Director – Stratum Legal.