When managing a strata property in Victoria, insurance isn’t just another task; it’s one of your most crucial responsibilities. Whether it’s protecting the building, shared assets, or people involved, strata insurance is more than just a regulatory checkbox. It’s a critical safeguard for your entire owners’ corporation. If you’re involved in strata management in Victoria, knowing exactly what’s required of you when it comes to insurance is essential. 

This blog will walk you through the core obligations, current legislation, and practical steps to help you remain compliant while protecting your strata community.

The Critical Role of Insurance in Strata Management

Strata insurance isn’t just a best practice; it’s a legal requirement under Victoria’s Owners Corporations Act 2006. If you’re involved in strata management in Victoria, you must ensure the owners corporation has taken out appropriate insurance that meets minimum requirements.

Here’s what’s mandatory:

  • Building Insurance: This policy covers the expense of repairing or reconstructing a property should it suffer damage or be destroyed. It’s vital to ensure the coverage amount accurately represents the entire cost to replace the property, encompassing all shared spaces.
  • Public Liability Insurance: Owners corporations with common property (excluding two-lot subdivisions) are legally required under the Strata Act in Victoria to hold public liability insurance of at least $20 million. This coverage provides protection against claims for personal injury or property damage occurring on common property. Depending on the scheme’s unique requirements, additional coverage may be advisable.
  • Voluntary Workers Insurance: For schemes that depend on the voluntary efforts of individuals, it’s wise to consider this insurance to provide coverage for any injuries they might sustain while carrying out their tasks.
  • Fidelity Guarantee Insurance: Although not legally required, this insurance is strongly recommended to safeguard against the potential misappropriation of funds by individuals entrusted with managing the scheme’s financial assets.

With owners corporations becoming increasingly complex, particularly in larger developments across strata management in Melbourne, understanding your obligations as a strata manager is key to maintaining financial security and legal compliance.

Strata Manager’s Compliance Checklist

Staying compliant isn’t just about having the right policy. It’s also about documentation, maintenance, transparency, and ongoing review. Below is a practical compliance checklist every strata manager should follow:

1. Review and Update Policies Annually: 

It’s absolutely crucial to review your insurance policies every single year. This isn’t just a suggestion; it’s essential to ensure your coverage continually adapts to evolving needs and accurately reflects the current, up-to-date cost required to replace your property and all its associated assets.

2. Maintain Accurate Records: 

You should always maintain detailed and precise records of all your insurance policies. This includes every bit of information: comprehensive coverage details, precise premium payment dates, and critical renewal dates. Keeping meticulous records guarantees complete transparency and immediate accessibility whenever this vital information is needed.

3. Communicate with Lot Owners:

It’s important to consistently keep all lot owners thoroughly informed about the scheme’s various insurance policies. This communication should include any and all changes in coverage, as well as adjustments to premiums. This proactive approach cultivates a strong culture of transparency and shared collective responsibility among all stakeholders.

4. Engage Professional Valuation Services: 

Always utilise professional valuation services to precisely and accurately determine the true replacement value of the property. This professional assessment is critical for ensuring that your building insurance coverage is not only sufficient but also fully compliant with all relevant regulations and requirements.

5. Understand Policy Exclusions and Limitations: 

Take the necessary time to become intimately familiar with everything that is not covered under your existing policies. A deep understanding of policy exclusions and limitations is vital; it helps you effectively manage expectations and allows you to proactively plan for securing any additional coverages that might be necessary.

Ensuring a Protected Strata Community

Beyond meeting legal standards, proper insurance helps build trust within the owners’ corporation. It also allows for faster and less stressful resolution of issues when something goes wrong. Here’s how you can further safeguard the community you manage:

Understand the Building’s Risk Profile

Each property is different. High-rise apartments, townhouse communities, and mixed-use developments carry different risks. Get to know the specific vulnerabilities of your strata building, whether it’s ageing infrastructure, water leaks, or fire hazards, and make sure these are reflected in your insurance policy.

Promote Transparency Among Lot Owners

Many insurance disputes arise from misunderstandings. Be clear with owners about what is and isn’t covered under the strata insurance policy. Encourage them to seek individual contents insurance for items inside their own units, especially as strata insurance typically doesn’t cover personal belongings.

Plan for Emergencies and Claims

Know how to act quickly if damage occurs. Have an emergency plan in place and know who to contact, both within the strata committee and the insurance provider. A fast response can minimise damage and lead to smoother claim processing.

Regularly Inspect and Maintain Common Areas

Insurers may reject claims if it’s found that neglect or lack of maintenance contributed to damage. Make sure regular inspections and preventative maintenance are part of your building’s schedule. This not only supports your insurance position but also improves property safety and longevity.

Navigating the complexities of strata insurance, understanding risk profiles, ensuring compliance, and managing claims can be daunting. Engaging a qualified and experienced strata management professional who specialises in these areas is highly advisable. Their expertise can ensure your strata community is comprehensively protected, giving all owners peace of mind and safeguarding their collective investment.

Conclusion:

Strata insurance compliance in Victoria isn’t something that can be overlooked or pushed to the side. As a strata manager, you play a vital role in protecting shared property, maintaining legal compliance, and ensuring peace of mind for every owner involved. By following the right steps and keeping detailed, up-to-date records, you help create a safer, well-managed strata community.

Need help managing your strata insurance obligations? Reach out to our experienced team at BFG Asset Management today. Call (03) 9804 8770 today.