According to UNSW’s City Futures Research Centre, 75 per cent to 85 per cent of owners’ corporations have identified major defects in their buildings1.
With numerous cases of building defects coming to light, having your building insured is the right thing to do. How do you know what kind of insurance you need and for how much? When it comes to being safe, you should take care to cover all the bases – evaluate your options and be aware of any hidden or ambiguous clauses and exclusions in your insurance contract.
Nearly all insurance contracts have exclusions relating to defects, both known and hidden. Often, certain types of defects in your property may prevent you from having adequate insurance. So, knowing a few things in advance can keep you and your property safe.
Here are 5 important considerations that you need to be across to protect your property:
Ensure your owners corporation or body corporate adopts a proactive approach in rectifying any defects by being ahead of the situation, connecting with stakeholders and ensuring compliance from all parties. This will maximise insurance coverage and avoid the risk of a claim denial due to defects or defective parts.
Knowing what kind of defects may compromise the safety of the building is crucial. For an owner, it may have personal financial implications and potential exposure to legal action.
The cost and type of insurance cover available for a building with defects will vary between insurers and their underwriting guidelines for defects. Generally, an insurer will consider the following factors:
By providing as much information as possible, you will be able to achieve the best insurance outcome based on your specific circumstances. There are a variety of sources of valuable information to determine the extent and severity of the defect and to decide the insurance cover available, such as:
Protecting the contents of your property (lot) with insurance is always a good idea. If you are renting your property, you may consider taking out a landlord’s insurance cover too. We recommend you discuss your options with your insurance provider so your’re not left vulnerable when there’s a crisis from building defects.
If you’d like to find out more on building compliance for your strata property, click here to download your free Community Living guide.
1. UNSW’s City Futures Research Centre, 2018, Defects in Strata: Research Overview
PICA Group acknowledges the traditional owners as the custodians of Australia, recognising their connection to land, waters and community. We pay our respects to First Nations Peoples and Elders, past and present.