Why you should get your apartment building insured

There are two different types of insurance that are compulsory for any owners corporation. They are as follows

• Reinstatement and replacement insurance
• Public liability insurance

Reinstatement and replacement insurance

The state of Victoria outlines the roles and responsibilities of the Owners Corporation (OC) in the the Owners Corporation Act 2006 and Owners Corporations Regulations (2007). By law, the OC must take out reinstatement and replacement insurance for all buildings on the common property. Reinstatement and replacement insurance should cover:

• Replacement, repair and rebuilding of any damaged property
• Any costs of demolishing and removing debris from the site
• Other costs, such as employing an architect or surveyor
• Shared services
• Replacement of services and structures, such as driveways and fences.
• When renewing insurance, all owners corporations must ensure that the sum insured is more than the value of the building.

Public liability insurance provides the owner’s corporation with the funds to compensate workers, residents, or other related persons in the case of damage to or loss of property, illness, injury or death.

Consider the structure of your own building insurance policy. There are also other types of insurance that you and your fellow apartment owners may want to consider investing in, depending on your specific situation. This could include office bearers legal liability, voluntary workers insurance, or workers compensation, amongst many others. It is important to only use insurers approved by the Australian Prudential Regulation Authority, and Consumer Affairs Victoria recommends that owners corporations obtain at least three quotes from different insurers.

Please note that the Owners Corporation Act 2006 and Owners Corporations Regulations (2007) are currently in the process of revision, so certain aspects of insurance may get clearer with the newly proposed Owners Corporations Regulations 2018. You can find more details in the Regulatory Impact Statement (RIS) shared by the Victoria government.

If you’d like to find out more on insurance for your property, download your free Community Living guide on strata financials.