What is Included Under a Body Corporate Insurance Policy?

What is Included Under a Body Corporate Insurance Policy?

Diving into the world of insurance can often be seen as a daunting experience. Understanding an individual insurance policy can often lead to confusion, let alone understanding a shared body corporate insurance policy. 

In Queensland, the Body Corporate and Community Management Act requires Bodies Corporate to insure common property, body corporate assets, public risk, and every building that contains a lot. Bodies Corporate may also take out additional policy items such as cover for Officer Bearers, Machinery Breakdown, Workers Compensation, Catastrophe, Lot Owners Fixtures and Improvements, and Flood, etc. 

The insurance cover that a Body Corporate must have is affected by the type of survey plan the scheme is registered under. The 2 common types of survey plan are:

• Building Format or
• Standard Format

Building Format Plan (BFP) – Schemes that are registered under a BFP, are generally plans of subdivision and are usually multi-storey buildings like blocks of residential units. Some townhouses can also be registered under a building format plan of subdivision.

A scheme registered under a BFP, requires the Body Corporate to arrange and place appropriate Building and Public Liability cover for the whole Scheme.  The public liability cover required to be put in place for the scheme is for common property only.

In this type of scheme, a body corporate must insure (for the full replacement value) each building that contains an owner’s lot (e.g. a unit or apartment).

Standard Format Plan (SFP) – A SFP is generally considered a low-rise development and is a subdivision plan that defines land with references to markings on the ground or a structural element (for example, survey pegs in the ground). An example of a Scheme that is established as an SFP includes a townhouse complex where each lot has a building and land around and/or at the front and back of the building (a backyard or courtyard).

The Body Corporate must insure (for the full replacement value) each Lot that shares a wall with another Lot (known as a common wall). 

If you are unsure what plan your scheme is registered under, please contact our office for further assistance.

So what is covered?

• Public liability of common areas;
• Common property and Body Corporate assets (e.g. pool, spas, tennis courts, and fences); and
• Lots in a BFP and lots in an SFP where there is a shared wall.

In a nutshell, the Building section of the policy covers the building structure, including external and internal permanent fixtures that were installed at the time of development (e.g. awnings, pergolas, built-in wardrobes, kitchen cabinets, bathroom vanities, solar panels, etc.). It is important to be aware of the specific policy exclusions, as some policies may specifically exclude some fixtures, whether that be due to age, or construction. Any damage being claimed must be caused as a result of a defined act or event.

A ‘defined act’ is generally an accidental or malicious event, storm/ water damage, or electrical fusion (i.e. motor burn out). It is important to note that generally, policies do not provide coverage for damage resulting from gradual deterioration, or lack of maintenance/ repair. It is vital that Owners ensure correct maintenance and repair of their individual Lots as this is often applicable under most Scheme’s By-Laws. 

Want to know how to make a claim against under your Body Corporate insurance policy?

As outlined above, if your Lot has sustained damage resulting from an insurance act/ event, please contact our office to obtain a claim form, along with assistance in completing the claim form. If the act/ event requires immediate action, our office will contact the insurer and request that they appoint an insurance assessor to assist with any make safe and to assist with the claim. Our office will request certain information from you when lodging any claim and we will seek this from the first initial point of contact, allowing for a smoother handover to the insurance company, which will assist in the speed of your claim.

Curious as to what insurance Owners may need by way of individual policies?

Owners should arrange and place their own individual contents insurance and/ or landlords’ insurance for any items that do not fall under the scope of the Body Corporate policy. These items can include, but are not limited to:

• Carpets;
• Light fittings;
• Mobile/fixed air conditioners;
• Curtains and blinds;
• Furniture;
• Household appliances e.g. dishwashers; and
• Valuables and personal equipment.

We hope this article allows you to walk away with the confidence in understanding an insurance policy for a Body Corporate. As always, we are here to provide any further assistance that may be needed, so please reach out to one of our body corporate managers on the Gold Coast, where we are able to provide you with trusted advice and clear direction.