As a commercial unit owner in a strata complex, you’ve probably heard a lot of conflicting advice about insurance. Some may tell you that a strata policy covers everything, while others may say you require additional building insurance. 

The reality? It’s often a whole lot simpler than it’s made out to be. However, this only applies if you understand where strata insurance stops and where your responsibility as a commercial unit owner begins. 

This guide breaks it down into a few key sections, and if you require more information, do not hesitate to reach out to our team at Morgan Insurance Brokers. 

What Is Strata Insurance?

In Australia, strata insurance is a compulsory type of building and liability insurance taken out for properties on a strata title. This includes apartment buildings, townhouses, and unit complexes that have shared areas. 

Strata insurance is typically arranged by an owners’ corporation to cover the building. Individual unit owners don’t arrange it themselves, but they pay their share through fixed levies. At its very core, strata insurance exists to protect the building as a whole, not individual units. 

Strata insurance typically covers: 

• The building structure, from the walls and the roof, through to the foundations. 
• Common property, such as foyers, stairwells, lifts, and shared car parks. 
• Shared services such as electrical mains, plumbing, and fire systems. 
• Public liability claim for shared spaces. 
• Damage from insured events like fires, storms, impact, and water damage. However, this is subject to policy terms. 

What Is Building Insurance for Commercial Properties?

Building insurance is typically associated with owning a standalone commercial property. With this, you’ll insure the structure, the fixed components, and some external features. However, for commercial unit owners in a strata complex, standalone building insurance is not required. This is because the strata policy already insures the building. 

Nonetheless, there are some exceptions. 

Some smaller strata schemes and/or older title arrangements tend to blur the lines. In certain cases, unit owners are responsible for parts of the structure inside their allotted boundary. This makes relying on assumptions risky. 

Key Differences: Strata Insurance vs Building Insurance

Here’s a simplified breakdown: 

Strata insurance: 

• Covers shared structure and common property spaces. 
• Arranged by the owners’ corporation. 
• Cost is shared across all owners. 
• Designed to protect the building, not your individual unit or business. 

Building insurance: 

• Covers a building owned by a single entity 
• Usually applies to freestanding commercial properties 
• Does not include coverage for common areas.

If you’re a commercial strata owner, you need to understand what your strata policy does and does not cover, because that gap is usually where your losses sit. 

Insurance Responsibilities for Commercial Unit Owners

As a commercial unit owner, your responsibilities lie in three places: 

1. First, your unit’s interior. Anything inside your lot boundary that isn’t considered part of your “base building” is your responsibility. This includes fit-outs, flooring, internal walls, and fixtures. 
2. Second, your lease obligations. If you lease your property, the lease will often push certain insurance responsibilities back onto you. This is particularly true around loss of rent or certain reinstatement timelines. 
3. Last but not least, your liability exposure. If someone is injured inside your unit, strata insurance is not appropriate. You’ll require public liability cover. 

Protecting Your Commercial Investment with Morgan Insurance Brokers 

When investing in commercial strata insurance, buying the right cover is important. At Morgan Insurance Brokers, we work with commercial unit owners who want appropriate and effective coverage. Our team reviews the latest strata policies alongside your property and lease arrangements to identify gaps and structure cover that responds when something goes awry. 

If you currently own a commercial unit and haven’t reviewed how your strata insurance interacts with your own cover, now is the time. 

Contact us today to protect your investment effectively. We’ll help make sure you’re not relying on cover that was never designed to protect you in the first place.