When you own or are looking to buy a strata property, one common question is whether strata includes building insurance. This is important because insurance affects your levies, your financial responsibilities, and how damage to the building or common property is handled.
In most NSW strata schemes, building insurance is arranged by the owners corporation and paid for through strata levies. This insurance usually covers the building structure and common property, such as shared walls, roofs, foyers, lifts, stairwells, driveways, and other shared areas.
However, strata insurance does not mean everything inside your apartment, townhouse, or unit is automatically covered. Personal belongings, contents, tenant items, landlord risks, and some internal improvements may need separate insurance.
Understanding what strata building insurance covers, what it does not cover, and what owners may need to arrange themselves can help prevent confusion when damage, repairs, or insurance claims arise. This guide explains how building insurance works in strata and what owners should check before assuming they are fully covered.
Does Strata Include Building Insurance?
Yes, in most NSW strata schemes, building insurance is included as part of the strata scheme’s shared responsibilities. The owners corporation is generally responsible for arranging insurance for the building and common property.
This insurance is usually paid for through strata levies. Each owner contributes to the owners corporation’s budget, and part of that budget is used to pay for insurance premiums, along with other shared expenses such as maintenance, administration, repairs, and long-term capital works.
However, it is important to understand that strata building insurance does not cover everything. It usually protects the building structure and common property, but it may not cover your personal contents, furniture, appliances, tenant belongings, or certain internal improvements.
Because every scheme and insurance policy can be different, owners should always check the certificate of insurance, policy wording, and any exclusions. This helps you understand what is covered by the strata policy and what you may need to insure separately.
What Is Strata Insurance?
Strata insurance is insurance arranged for the strata scheme as a whole. It is usually organised by the owners corporation and is designed to protect the building, common property, shared areas, and certain legal liabilities.
In a strata property, many parts of the building are owned or managed collectively. This can include the roof, external walls, foyers, lifts, stairwells, driveways, shared gardens, car parks, and other common areas. Strata insurance helps make sure these shared parts of the property are financially protected if damage or an insured event occurs.
Strata insurance may also include public liability cover. This helps protect the owners corporation if someone is injured on common property and makes a claim.
For owners, strata insurance provides an important layer of protection, but it should not be confused with personal contents insurance or landlord insurance. The strata policy may cover the building and common property, but owners may still need their own insurance for belongings, tenant-related risks, or items inside the lot that are not covered by the strata policy.
Who Arranges Building Insurance in a Strata Scheme?
In a NSW strata scheme, building insurance is usually arranged by the owners corporation. The owners corporation is made up of all lot owners and is responsible for managing common property, finances, records, insurance, repairs, and other shared obligations.
In many schemes, the strata manager helps arrange or coordinate the insurance on behalf of the owners corporation. This may include obtaining insurance quotes, renewing the policy, keeping insurance records, helping with claims, and providing certificates of currency when requested.
However, the insurance is not the personal responsibility of the strata manager. The owners corporation remains responsible for making sure the required insurance is in place and that the building is properly insured.
The cost of the insurance is usually paid from strata levies. This means each owner contributes toward the premium as part of the scheme’s shared expenses. Because insurance can be one of the larger costs in a strata budget, owners and committees should review the policy carefully and make sure the cover is suitable for the building.
What Does Strata Building Insurance Usually Cover?
Strata building insurance usually covers the main building structure and common property within the strata scheme. While every insurance policy is different, the cover generally focuses on areas that are shared by owners or form part of the building itself.
This may include the roof, external walls, floors, ceilings, foyers, stairwells, lifts, driveways, shared garages, common gardens, fences, and other shared facilities. It may also cover some fixed parts of the building, depending on the policy and the strata plan.
Strata insurance may help protect the scheme against insured events such as fire, storm damage, impact damage, escape of water, malicious damage, and other events listed in the policy. It may also include public liability cover for common property.
However, owners should not assume that every item inside their lot is covered. The exact cover can depend on the policy wording, exclusions, excesses, and whether the item is considered part of the building, common property, or personal contents.
This is why it is important for owners and committees to review the certificate of insurance and policy documents. Understanding what is covered can help avoid confusion if damage occurs or an insurance claim needs to be made.
What Is Not Usually Covered by Strata Insurance?
Strata insurance does not usually cover everything inside an individual apartment, townhouse, or unit. This is one of the most common misunderstandings for strata owners and buyers.
In many cases, strata insurance will not cover personal contents such as furniture, clothing, electronics, jewellery, artwork, appliances, rugs, or other belongings. If you live in the property, these items are usually protected through your own contents insurance.
If the property is rented out, strata insurance also does not usually cover landlord risks such as tenant damage, loss of rent, or landlord-owned furniture and appliances. For this, owners may need separate landlord insurance.
Strata insurance may also exclude certain internal improvements, renovations, fixtures, fittings, or upgrades depending on the policy and the strata plan. It may not cover damage caused by wear and tear, poor maintenance, gradual deterioration, or events specifically excluded by the insurer.
Because cover can vary between schemes and insurers, owners should not rely on assumptions. The safest approach is to check the insurance policy, certificate of currency, product disclosure statement, and any exclusions. This will help you understand what the strata policy covers and what you may need to insure separately.
Does Strata Insurance Cover Inside My Apartment or Unit?
Strata insurance may cover some parts inside your apartment or unit, but it does not usually cover everything inside the lot.
In many cases, the strata policy may cover parts of the building structure or fixed elements that are considered part of the insured building. This may include walls, ceilings, floors, windows, doors, built-in fixtures, and some permanent fittings, depending on the policy and the strata plan.
However, your personal belongings are not usually covered by strata insurance. Items such as furniture, clothing, electronics, artwork, jewellery, rugs, freestanding appliances, and other personal contents generally need to be covered by your own contents insurance.
There can also be grey areas. For example, some internal fixtures, renovations, flooring, cabinetry, blinds, or owner-installed upgrades may or may not be covered depending on the policy wording and whether they are treated as part of the building or personal property.
If you are unsure, ask for a copy of the certificate of insurance and policy documents. You can also ask the strata manager, strata committee, or insurer to clarify whether a specific item is covered. This is especially important before making a claim or assuming you do not need your own insurance.
Are Owners Still Required to Get Their Own Insurance?
Yes, owners may still need their own insurance even if the strata scheme has building insurance in place.
Strata building insurance is designed to protect the building and common property. It is not a replacement for personal contents insurance, landlord insurance, or cover for items that belong specifically to the owner or tenant.
If you live in the property, you may need contents insurance to cover personal belongings such as furniture, clothing, electronics, jewellery, artwork, rugs, and freestanding appliances.
If you rent out the property, you may need landlord insurance. This can help cover risks that are not usually included in the strata policy, such as tenant damage, loss of rent, landlord-owned furniture, and certain rental-related claims.
Owners should also consider whether they have made any internal upgrades or renovations. Some improvements may not be fully covered by the strata policy, depending on the policy wording and how the item is classified.
The best approach is to treat strata insurance as building cover for the scheme, not complete protection for everything you own. Reviewing the strata insurance policy and speaking with your own insurer can help you understand what extra cover you may need.
How Is Strata Building Insurance Paid For?
Strata building insurance is usually paid for by the owners corporation using funds collected through strata levies.
Each owner contributes to the scheme’s budget through regular levies. These levies are used to pay for shared expenses such as building insurance, common property repairs, cleaning, gardening, administration, strata management fees, utilities for shared areas, and long-term capital works.
The cost of building insurance is usually included in the annual budget approved by the owners corporation. Because insurance can be a significant expense, it is important for owners and strata committees to review the policy, premium, excesses, and level of cover before renewal.
The amount each owner pays is usually based on their unit entitlement. This means some owners may contribute more or less than others, depending on how the scheme is structured.
Even though the insurance is arranged for the scheme as a whole, every owner contributes to the cost. This is why it is important for owners to understand what the strata insurance covers and what separate insurance they may still need for their own contents, rental risks, or personal belongings.
Why Building Insurance Is Important in Strata
Building insurance is important in strata because one issue can affect more than one owner, lot, or shared area. In an apartment building, townhouse complex, or mixed-use scheme, damage to the building is rarely just one person’s concern.
For example, a fire, storm, water leak, impact damage, or structural issue may affect common property and several individual lots at the same time. Without suitable building insurance, the owners corporation may need to raise extra funds from owners to help cover repairs or rebuilding costs.
Strata building insurance helps protect the scheme from major financial pressure when insured damage occurs. It can also help ensure repairs are handled through a proper claims process, rather than leaving owners to manage shared building damage individually.
Insurance also supports risk management. A well-insured strata scheme gives owners more confidence that the building, common property, and shared liabilities are being managed properly. This is especially important for committees, buyers, investors, and residents who want certainty around how the property is protected.
What Should Owners Check in the Insurance Policy?
Owners should not assume that strata insurance covers every situation. The best way to understand the cover is to review the insurance documents for the scheme.
Important details to check include the certificate of currency, policy schedule, sum insured, excess amounts, exclusions, public liability cover, renewal date, and claims process. These details can help owners understand what is covered, what is not covered, and what costs may apply if a claim is made.
It is also worth checking whether there are any special conditions, limits, or exclusions that apply to the building. Some policies may have specific rules around water damage, defects, maintenance issues, wear and tear, or owner-installed improvements.
Owners should also check whether the building appears to be insured for an appropriate amount. If the property is underinsured, the owners corporation may face financial pressure if the insurance payout is not enough to repair or rebuild after a major event.
If anything is unclear, owners can ask the strata manager, strata committee, or insurer for clarification. Understanding the insurance policy before a claim happens can help avoid confusion, delays, and unexpected costs later.
What Happens If the Building Is Underinsured?
If a strata building is underinsured, the owners corporation may not receive enough money from the insurer to fully repair or rebuild the property after a major event.
This can create serious financial pressure for owners. If the insurance payout does not cover the full cost of the work, the owners corporation may need to raise additional funds. This could mean increasing levies, raising a special levy, delaying repairs, or making difficult decisions about how the work is funded.
Underinsurance can happen for several reasons. Building costs may increase, the property may not have been valued recently, major improvements may not have been reflected in the policy, or the sum insured may not have kept pace with repair and replacement costs.
This is why regular insurance reviews are important. Strata committees should consider whether the insured amount is suitable for the building and whether a professional valuation is needed. Keeping insurance up to date helps protect owners and reduces the risk of unexpected costs if a major claim occurs.
What If There Is an Insurance Claim?
If there is damage that may be covered by strata insurance, the issue should usually be reported to the strata manager or strata committee as soon as possible. They can help confirm whether the damage relates to common property, the building structure, or something that may need to be handled by an owner’s personal insurer.
The first step is to document the damage. Take photos or videos, record the date the issue occurred, and keep any invoices, reports, or correspondence connected to the matter. If the damage is urgent, such as a water leak, fire damage, electrical risk, or safety hazard, it should be reported immediately so steps can be taken to reduce further damage.
The strata manager or committee may then contact the insurer or broker, lodge the claim, arrange inspections, and help coordinate the next steps. The insurer may ask for evidence, repair quotes, reports, or access to affected areas before deciding whether the claim is accepted.
It is important to remember that not every issue will be covered by strata insurance. The insurer will assess the claim against the policy wording, exclusions, excesses, and the cause of the damage.
Owners should also check whether they need to make a separate claim through their own contents or landlord insurance. For example, strata insurance may respond to building damage, while an owner’s personal policy may be needed for furniture, personal belongings, tenant damage, or loss of rent.
Common Misunderstandings About Strata Insurance
Strata insurance can be confusing because many owners assume it covers more than it actually does. While it usually provides important protection for the building and common property, it is not the same as complete personal insurance for every owner or resident.
One common misunderstanding is that strata insurance covers everything inside a unit. In reality, personal contents such as furniture, clothing, electronics, jewellery, artwork, rugs, and freestanding appliances are usually not covered. Owners and tenants may need their own contents insurance for these items.
Another misunderstanding is that landlords do not need separate insurance. If you rent out your strata property, the strata policy will not usually cover tenant damage, loss of rent, or landlord-owned contents inside the lot. These risks are usually handled through landlord insurance.
Some owners also assume all water damage is automatically covered. However, insurers usually look at the cause of the damage, whether maintenance was neglected, whether the event is covered by the policy, and whether any exclusions apply.
It is also important to understand that the strata manager does not personally decide whether a claim is accepted. The insurer assesses the claim based on the policy wording, evidence, exclusions, and circumstances of the damage.
The best way to avoid confusion is to review the insurance documents before a problem happens. This helps owners understand what the strata policy covers and what extra insurance they may need for their own belongings, rental risks, or internal improvements.
Final Thoughts
Strata usually includes building insurance through the owners corporation, and the cost is generally paid through strata levies. This insurance helps protect the building, common property, shared areas, and certain liabilities that affect the scheme as a whole.
However, strata building insurance does not cover everything. Owners should not assume that their personal contents, tenant-related risks, landlord-owned belongings, or all internal upgrades are automatically included. Depending on your situation, you may still need contents insurance, landlord insurance, or additional cover for items inside your lot.
For owners and committees, the key is to understand what the strata policy covers before a claim happens. Reviewing the certificate of insurance, policy schedule, exclusions, excesses, renewal date, and claims process can help avoid confusion and unexpected costs later.
At Elevated Strata Communities, we help NSW strata schemes stay organised with insurance records, communication, claims support, compliance, and day-to-day strata management. With clear guidance and proactive support, owners can better understand their responsibilities and feel more confident about how their building is protected.