Strata Insurance Explained: What’s Covered (And What Isn’t) in NSW

If you've ever experienced water damage, a storm, or an accident in your apartment building, you've probably wondered:

"Is this covered by strata insurance or my own insurance?"

It's one of the most common questions strata managers receive, yet it's also one of the most misunderstood aspects of strata ownership.

Understanding who insures what can save owners thousands of dollars and avoid unnecessary disputes when something goes wrong.

What is strata insurance?

In NSW, an Owners Corporation is legally required to insure the building and common property.

This insurance is paid for through your strata levies and generally covers the building itself, including:

• Roofs and external walls

• Windows (in most schemes)

• Common hallways and foyers

• Lifts

• Shared facilities such as pools, gyms and gardens

• Permanent fixtures within lots that form part of the building (depending on the policy)

The policy is designed to protect the building as a whole, not the individual owner's personal belongings.

What isn't covered?

Many owners mistakenly believe that strata insurance covers everything inside their apartment. It doesn't.

Generally, owners are responsible for arranging their own contents insurance to protect items such as:

• Furniture

• Clothing

• Electronics

• Appliances that aren't fixed to the property

• Jewellery and valuables

• Personal liability within their lot

If you're a landlord, you'll also want landlord insurance to cover risks such as tenant damage, loss of rent and legal liability.

Water leaks: Who pays?

Water leaks are one of the most common causes of insurance claims in strata.

The answer isn't always straightforward.

For example:

• If a burst pipe in common property causes damage, the Owners Corporation's insurance may respond.

• If a washing machine hose inside a lot bursts and floods neighbouring apartments, responsibility may sit with the lot owner.

• If damage is gradual due to poor maintenance rather than a sudden event, insurance may not respond at all.

Each claim depends on the source of the problem and the specific policy wording.

What about the insurance excess?

Even when a claim is accepted, there may be an excess payable.

Who pays that excess depends on:

• The cause of the damage

• The scheme's by-laws

• The circumstances surrounding the claim

• Decisions made by the Owners Corporation

This is another reason why it's important to report issues quickly and keep good records.

How owners can protect themselves

Every owner should:

• Read the building's insurance summary.

• Arrange appropriate contents (and landlord) insurance.

• Report maintenance issues promptly.

• Understand where the boundary lies between common property and their own lot.

• Ask questions before lodging a claim if they're unsure.

The bottom line

Insurance is there to protect one of your biggest investments but only if you understand how it works.

Knowing the difference between strata insurance and personal insurance can help avoid costly surprises and ensure claims are handled quickly when unexpected events occur.

If you're unsure what your Owners Corporation's policy covers, speak with your strata manager. A quick conversation today can prevent significant confusion tomorrow.