Strata Insurance: What It Covers & Who Pays

Strata insurance is one of those topics that lands on a property manager’s desk constantly, yet it rarely gets the clear explanation it deserves. Whether you are managing a portfolio of apartments, townhouses, or mixed-use buildings, understanding strata insurance is part of your professional responsibility, and your owners rely on you to get it right. In this guide, I am breaking down exactly what strata insurance covers, who foots the bill, and what property managers need to know to keep owners informed and protected.

What Is Strata Insurance?

Strata insurance is a shared insurance policy held by the owners’ corporation, body corporate, or strata company, depending on which state your property is in. It exists to protect the building and common areas that all lot owners share, rather than anything belonging to a single owner.

Why Strata Insurance Matters in Australia

According to the national strata data reissued by UNSW in October 2025, around 15% of Australians live in strata, across 367,970 schemes and 3,173,631 lots nationwide. With a combined insured value of approximately $1.4 trillion, these figures show just how significant strata insurance has become in the Australian property landscape.

Insurance Obligations Vary by State and Scheme Type

Strata and community title schemes generally have compulsory insurance obligations across Australia, but the exact rules are not identical in every state and territory. The insurance required depends on the legislation, the scheme type, and sometimes the survey plan, with some exemptions applying.

In New South Wales, for example, the owners corporation must ensure the building is insured and public liability cover is in place. In Queensland, the body corporate’s insurance obligations vary depending on how the scheme is registered.

What Does Strata Insurance Cover?

Most property managers understand the basics, but the details are where confusion tends to creep in. Here is what a standard strata insurance policy covers.

Building Structure and Common Property

Strata insurance covers the building structure, including:

• External walls
• Roofs
• Foundations
• Balconies
• Windows
• Shared pipes
• Underground services

It also covers all common property: 

• Car parks
• Lifts
• Pools
• Gyms
• Entrance lobbies
• Gardens
• Driveways
• Fencing

Fixed items that were part of the original build shown on the strata plan, such as:

• Permanent flooring
• Bathroom fittings
• Built-in cupboards

Whether renovations, upgraded fixtures, or owner-made improvements are covered will depend on the following:

• Jurisdiction
• Scheme type
• Policy wording

In some cases, these items may fall outside the base policy or require separate disclosure or additional cover. This distinction matters, particularly in older buildings or commercial spaces where individual lots have been altered over time.

Public Liability

Public liability cover is a standard part of strata insurance because it protects the owners corporation or body corporate if someone is injured on common property. If a visitor slips near the pool or trips in a shared hallway, the policy may respond. In New South Wales, for example, strata schemes must hold at least $20 million in public liability cover, although minimum requirements can vary in other jurisdictions. This cover helps protect the scheme from the financial consequences of personal injury claims arising from incidents in shared areas.

As part of my work at PMVA, I see property managers regularly overlooking the importance of documenting incidents on common property. A clear incident register and prompt reporting to the insurer can make all the difference when a claim needs to be assessed.

Additional Optional Cover

Many policies offer optional extras worth considering, including:

• Machinery breakdown over for lifts, air conditioning systems, and other shared equipment
• Loss of rent for lot owners whose tenants cannot occupy the property after an insured event (typically up to 12 months)
• Temporary accommodation costs if the property becomes uninhabitable
• Voluntary workers’ insurance for unpaid, authorised workers carrying out tasks on behalf of the owners corporation
• Theft and vandalism cover for common area contents

What Strata Insurance Does Not Cover

This is the section that generates the most owner disputes, and it is where property managers earn their credibility.

Strata insurance does not cover:

• Personal contents inside individual units, including furniture, appliances, clothing, and electronics
• Renovations or improvements made by individual owners after settlement
• The landlord’s fixtures and fittings inside a rented lot may not be covered by the strata policy, so landlord insurance is often still needed
• Tenant’s personal belongings (tenants need their own contents policy)
• Business interruption for individual commercial tenants

A practical example: if a storm floods a ground-floor car park and water seeps into a unit, damaging the carpet and a custom kitchen renovation, the strata insurance covers the car park repair. The landlord’s contents policy covers the carpet and blinds. The tenant’s policy covers personal belongings. Three separate claims are required. Property managers who understand this clearly can set owner expectations accurately before an incident occurs, rather than fielding calls from frustrated owners after the fact.

Who Pays for Strata Insurance?

The owners’ corporation or body corporate arranges and pays for strata insurance using funds collected from all lot owners through strata levies. Individual owners do not choose the insurer or negotiate the policy. That responsibility sits with the committee or the appointed strata manager.

How Contributions Are Calculated

Levy contributions are calculated based on each owner’s unit entitlements, which are typically tied to the size or value of the lot. A larger apartment or a lot with access to additional facilities generally carries a higher entitlement and therefore a higher contribution.

What the Premium Data Shows

According to the CHU 2025 Strata Market Report, the average annual strata insurance premium per lot in Australia was $981 in the twelve months to June 2025, up from $954 the previous year. That represents a 2.8% increase, which sat below the 3.4% growth in household incomes over the same period, meaning affordability has largely been maintained. For context, house insurance premiums rose 14% over the same period, five times faster than strata premiums.

Strata levies are commonly paid in regular instalments, often quarterly, but payment cycles, notice periods, and the consequences of falling behind vary by jurisdiction. In some states, owners who are not financial may lose voting rights until the debt is cleared.

State-by-State Terminology: Owners Corporation vs Body Corporate

One of the most common sources of confusion for property managers working across state boundaries is the different terminology used for the same governing body. The table below summarises the key differences:

The responsibilities are consistent across jurisdictions, even where the names differ. In New South Wales, the owners corporation is generally responsible for the scheme’s management, finances, and required insurance, but property managers should not assume the same terminology or insurance obligations apply in every state or scheme type. Understanding which Act applies to each property in your portfolio is a fundamental part of legal responsibilities in property management that no property manager can afford to overlook.

How Strata Insurance Premiums Are Calculated

Several factors influence what a strata scheme pays for insurance, and they extend well beyond the size of the building. Insurers assess:

• Building sum insured, which must reflect the full cost of replacement, including demolition and professional fees
• Building age, condition, and construction type
• Location and climate risk exposure, including flood, cyclone, or bushfire proximity
• Presence of high-value facilities such as lifts, pools, or gymnasiums
• Claims history of the scheme
• Known defects, including combustible cladding or unresolved building disputes
• Occupancy type, with commercial strata attracting higher Emergency Services Levy rates than residential strata

In NSW, strata insurance premiums can include statutory charges such as insurance duty and the Emergency Services Levy, but the exact amount will vary depending on the property, the policy, and the insurer.

Underinsurance Is a Growing Risk

One issue I see repeatedly across property portfolios is underinsurance. ABS producer price index data shows that input prices to the house construction industry rose from 120.5 in December 2020 to 159.2 in June 2024, an increase of about 32%. 

Many buildings have not had a professional valuation in three or more years, which means their sum insured may no longer reflect the true cost of rebuilding. If a total loss occurs and the building is underinsured, owners may need to cover the shortfall. This is a conversation worth having at every annual general meeting.

The Difference Between Strata Insurance and Landlord Insurance

A question I hear regularly from investors and landlords is whether strata insurance is enough. The short answer is no.

Strata insurance generally covers the building and common areas, but whether it also covers parts of an individual lot will depend on the jurisdiction, scheme type, and policy wording. Landlords who own a strata unit still need a separate landlord insurance policy to cover:

• Contents inside the unit, including fixtures and fittings
• Legal liability arising from incidents inside the lot
• Tenant-related losses, including rent default and deliberate damage
• Loss of rent if the lot becomes uninhabitable due to a covered event specific to the unit

Why Multiple Claims May Be Required

As RentCover Australia explains, when a storm damages a rented unit, three separate claims are typically required: 

• One against strata insurance for the building
• One against the landlord’s policy for fixtures and fittings
• One against the tenant’s contents policy for personal belongings

This is an important distinction for property managers to communicate clearly to landlord clients, particularly those new to strata investment. My team at PMVA supports agencies with investment property compliance processes that include landlord insurance audits as part of regular portfolio checks. Knowing that every property in a portfolio is correctly and adequately insured protects both the landlord and the agency.

Strata Insurance and Your Responsibilities as a Property Manager

Property managers play an important role in the strata insurance process, even when the owners corporation or a professional strata manager holds primary responsibility.

Core Responsibilities in Practice

Your responsibilities typically include:

• Advising landlord clients on the need for separate landlord and contents insurance
• Coordinating with the body corporate to confirm what the strata policy covers before tenants move in
• Reporting incidents promptly on common property to the relevant strata manager or insurer
• Maintaining records of insurance certificate details for each strata property in your portfolio
• Conducting insurance audits as part of routine compliance checks

If you manage commercial property management portfolios that include strata-titled offices or retail, the complexity increases further. Commercial strata policies carry higher Emergency Services Levy rates, and coverage for outgoings, business interruption, and essential services compliance must all be carefully coordinated.

Administrative Systems Matter

Managing the administrative side of strata compliance is one area where a systematic approach pays dividends. I have seen property managers spend hours each month:

• Tracking insurance certificates
• Chasing renewal documentation
• Reconciling levy contributions

This is exactly the kind of task that, when systematised, frees your team to focus on relationships and growth rather than paperwork. If you are looking at how to organise this better across your portfolio, our guides on real estate asset management and outsource accounting are worth exploring.

Software Can Help Centralise Key Tasks

Choosing the right tools to manage strata properties at scale is also important. Our review of strata management software options in Australia can help you identify platforms that centralise in one place:

• Compliance tracking
• Levy management
• Insurance documentation

What to Do When You Need to Make a Claim

Knowing the process before a claim is needed is part of managing strata properties professionally. When an insured event occurs on common property, the steps are generally:

1. Secure the site and prevent further damage where it is safe to do so
2. Document everything immediately, including photographs, written accounts, and any emergency service reports
3. Notify the strata manager or body corporate committee as soon as possible
4. Contact the insurer directly or through the strata manager to lodge a formal claim
5. Obtain quotes for repair work from approved contractors where required
6. Track the claim to completion and ensure all affected owners are kept informed

Excess payments on strata claims can apply to the owners’ corporation or to individual lot owners, depending on which event caused the damage and how many lots were affected. Your insurer’s Product Disclosure Statement (PDS) will outline the specific excess arrangements for your policy. Reviewing this annually at levy time is a practical habit I recommend building into your portfolio management calendar.

FAQs: Strata Insurance

The Foundation Every Strata Portfolio Needs

Strata insurance is not a set-and-forget obligation. It is a dynamic compliance requirement that changes as buildings age, ownership structures evolve, and climate risks intensify. Property managers who take the time to understand what is covered, who pays, and where the gaps lie are the ones their landlord clients trust with their most valuable assets. Building a systematic approach to strata insurance oversight, from levy tracking to annual compliance audits, is the foundation that protects both your clients and your agency’s reputation.