Avg premium
~$981/lot/yr
Buildings underinsured
~80%
Top claim type
Water damage
Valuation cycle
Every 3–5 yrs
What strata insurance covers
Strata insurance is a policy taken out by the owners corporation (called the body corporate in Queensland) to cover the building and common property. Every state and territory in Australia requires it by law. The policy insures the entire strata scheme, not individual lots — and the cost is shared across all owners through quarterly strata levies.
The building insurance component of a strata policy typically covers:
- Building structure: walls, roof, floors, ceilings, balconies, and structural elements
- Common property: lobbies, stairwells, lifts, driveways, car parks, gardens, pools, and gyms
- Building systems: plumbing, wiring, electrical substations, fire safety systems, and ducted air conditioning
- Fixed items within units: internal walls, ceilings, cornices, skirting boards, built-in kitchen cabinetry, fixed bathroom fixtures, shower screens, windows, doors, and fixed tiling
- External features: guttering, fences, sealed driveways, garages, decks, and sheds
The policy covers damage from insured events: fire, storms, lightning, explosion, water damage (burst pipes, leaks), impact damage, vandalism, theft, earthquake, glass breakage, and malicious acts. The specific list of covered events varies between insurers, so it is worth reading the Product Disclosure Statement (PDS) rather than assuming everything is included.
Fixed items vs contents — the key distinction
What is not covered
This is where most owners get caught out. Strata insurance is a building policy, not a contents policy. It does not cover:
- Personal belongings: furniture, electronics, clothing, and household items inside your unit
- Floor coverings: carpets, rugs, and floating timber floors
- Window furnishings: curtains, blinds, and shutters
- Portable appliances: freestanding dishwashers, washing machines, dryers, and removable air conditioners
- Light fittings: anything you installed yourself that is not hard-wired
- Building defects: concrete cancer, waterproofing failures, and construction defects are maintenance or defect issues, not insurable events
- Wear and tear: deterioration from age and use is not covered — that is what the capital works fund is for
- Your car in the garage: vehicles parked in common property car spaces are not covered by the strata policy
Renovations create grey areas
Types of strata insurance
A comprehensive strata insurance program is not a single policy — it is a bundle of several policies covering different risks. Most strata insurers offer combined policies that package building insurance, public liability, and fidelity guarantee together, with optional add-ons for the rest.
Strata insurance policy types
| Policy | Required? | What it covers |
|---|---|---|
| Building insurance | Mandatory (all states) | Repair or replacement of the building structure and common property against fire, storm, water damage, and other insured events |
| Public liability | Mandatory (all states) | Legal liability for death, injury, or property damage to third parties on common property |
| Office bearers liability | Recommended | Legal costs and damages against committee members for errors or omissions in managing the scheme |
| Fidelity guarantee | Mandatory (SA); recommended elsewhere | Theft or fraud of the corporation’s funds by anyone authorised to handle them |
| Voluntary workers | Recommended | Injury to volunteers performing work on behalf of the owners corporation (e.g. committee members doing garden work) |
| Workers compensation | Mandatory if employing staff | Injury to employees of the owners corporation (e.g. building manager, caretaker) |
| Machinery breakdown | Optional | Lifts, pumps, air conditioning plant, and other mechanical or electrical equipment |
Office bearers liability protects the committee
State-by-state insurance requirements
Every state and territory requires building insurance for full replacement value, but the specific legislation, minimum public liability amounts, and additional requirements vary. NSW and Victoria require $20 million minimum public liability; other states require $10 million, though $20 million is now the industry standard recommendation.
Strata insurance legislation by state
Two-lot schemes with physically detached buildings may exempt by unanimous resolution. No mandatory valuation cycle since 2015, but full replacement value must be maintained.
Prescribed OCs must obtain valuations every 5 years. Two-lot subdivisions exempt. VCAT can grant exemption if insurance is unavailable on reasonable terms.
Requirements vary by plan type. Building format plans: body corporate insures all. Standard format with shared walls: body corporate insures. Freestanding lots: individual owners insure their own buildings.
Must insure against fire, storm/tempest (excluding sea, flood, erosion), lightning, explosion, and earthquake. If insurance is unavailable on reasonable terms, the closest available coverage must be obtained.
Fidelity guarantee insurance is mandatory if the corporation has an admin or sinking fund. Must cover the maximum balance over the preceding 3 years, or $50,000 — whichever is higher.
Individual lot policies are not compliant — must be a single policy for the entire site. Penalty: up to 50 penalty units.
Class B unit plans can exempt from building insurance if each unit is insured individually (must register exemption with Registrar-General). Public liability still required.
What individual lot owners still need
Strata insurance covers the building. It does not cover what is inside your unit. Every lot owner should have their own insurance, and the type depends on how you use the property.
If you live in the unit
You need: contents insurance
- Furniture, electronics, and personal belongings
- Carpets, curtains, and blinds
- Portable appliances (washing machine, dryer, dishwasher)
- Individual air conditioning units
- Removable light fittings
- Personal liability within your unit
If you rent it out
You need: landlord insurance
- Your fixtures and fittings inside the unit
- Loss of rent if the unit becomes uninhabitable
- Malicious or accidental damage by tenants
- Legal liability for injury to tenants or their visitors
- Theft by tenants
- Legal costs for tenancy disputes
The strata policy's public liability does not cover you inside your lot
Want to estimate the strata fees for a property?
Insurance is typically the single largest line item in a strata budget. Our calculator estimates quarterly strata levies based on property type, location, building age, and amenities.
Use the Strata Fee Calculator →How much strata insurance costs
The national average strata insurance premium is approximately $981 per lot per year (CHU 2025 Strata Market Report), up 2.8% from the prior year. That is well below the 14% increase in standalone house insurance over the same period.
However, the national average masks enormous variation. What your building actually pays depends on:
- Location and natural disaster risk: buildings in cyclone, flood, or bushfire zones pay substantially more. North-west WA strata premiums average over $18,000 per policy.
- Building age and construction: older buildings with outdated wiring, plumbing, or materials cost more to insure. Timber construction costs more than concrete.
- Claims history: a building with multiple water damage claims will face higher premiums and elevated excesses ($5,000–$10,000 instead of the standard $1,000–$2,000).
- Number of lots and building size: larger buildings cost more in total but less per lot due to economies of scale.
- Amenities: pools, gyms, saunas, and other shared facilities increase public liability risk and therefore premiums.
- Cladding: buildings with combustible cladding face premium increases exceeding 200% and excesses above $100,000.
Premium ranges by region
| Region | Approx. per lot/year | Key risk factor |
|---|---|---|
| National average | ~$981 | — |
| Sydney / Melbourne / Brisbane | $600–$1,500 | Building age, claims history |
| North QLD (Townsville, Cairns) | $2,000–$4,000+ | Cyclone risk |
| North-west WA (Karratha) | $3,000–$18,000+ | Extreme cyclone risk |
| Cladding-affected buildings | 2–3× base rate | Combustible cladding |
Ranges are indicative. Actual premiums depend on the specific building, sum insured, excess, and insurer. Source: CHU 2025 Strata Market Report, ACCC Cyclone Reinsurance Pool monitoring.
Common claims and excesses
Water damage accounts for roughly half of all residential strata insurance claims in Australia. Storm damage makes up another quarter. Understanding the most common claim types — and the excesses that apply — helps you anticipate what a claim will actually cost.
Water damage
~50% of all claimsBurst pipes, flexi hose failures, leaking roofs, faulty plumbing, overflows. The single most common and expensive category of strata claims across Australia.
Typical excess: $5,000–$10,000
Storm and weather
~25% of all claimsSevere weather, cyclone damage, hail, wind, lightning strikes, and flood (if covered). Highly seasonal and geographically concentrated in northern Australia.
Typical excess: $1,000–$2,000
Fire
Less frequent but high severityFaulty wiring, dryer lint buildup, unattended cooking, candles, and increasingly lithium-ion battery fires from e-bikes and scooters stored in common areas.
Typical excess: $1,000–$2,000
Accidental damage
CommonImpact damage to common property, broken glass, accidental breakage of fixtures and fittings. Generally straightforward claims with lower individual costs.
Typical excess: $1,000–$2,000
Public liability
Less frequent but most expensiveInjury to visitors or residents on common property — slip-and-fall on wet tiles, falling objects, trip hazards. Legal costs alone can run into six figures.
Typical excess: $1,000–$5,000
Water damage excesses are rising fast
The underinsurance problem
Industry estimates suggest approximately 80% of strata buildings in Australia are underinsured. This is arguably the single biggest financial risk facing strata owners, and most people do not know they are exposed until it is too late.
Underinsurance means the sum insured on the building policy is less than the actual cost to rebuild. If a building insured for $15 million would cost $22 million to rebuild, the owners corporation — meaning every owner — is personally liable for the $7 million gap.
Why so many buildings are underinsured
- Construction costs have surged: building costs have risen over 30% since 2020, with house construction up 41% and other residential up 25%. A valuation from 2019 is now dangerously outdated.
- Valuations are not done often enough: many schemes rely on the insurer’s automatic indexation rather than commissioning a proper quantity surveyor valuation. Automatic indexation does not account for site-specific factors like heritage requirements, access constraints, or compliance upgrades.
- Hidden costs are missed: replacement value must include demolition, site clearance, debris removal, architect and engineer fees, council compliance costs, and temporary accommodation — not just the cost of the new structure.
- Committees set the sum insured themselves: some committees estimate the replacement cost without professional advice, often confusing market value with replacement value.
What happens if your building is underinsured
In a total loss (e.g. a fire that destroys the building), the insurer pays out the sum insured. If that is $7 million short of the actual rebuild cost, the owners corporation must fund the difference. This is typically collected from owners as a special levy, proportional to unit entitlements. For a 40-unit building with a $7 million shortfall, that is $175,000 per lot on average.
Even in a partial loss, underinsurance is costly. While most strata policies do not apply the co-insurance (average) clause found in standard commercial policies, the insurer will still only pay up to the sum insured. If major structural repair costs $5 million but the building is only insured for $3 million, the $2 million gap comes from the owners.
Replacement value is not market value
How to check if your building is adequately insured
Whether you are buying into a scheme or already own a lot, there are concrete steps you can take to verify that the building’s insurance is adequate.
- Request the insurance certificate of currency: this document shows the current sum insured, the insurer, the policy number, expiry date, and the excess. Every owner is entitled to see it. If you are buying, it will be in the strata report (or the Section 184 certificate in NSW).
- Check when the last replacement cost valuation was done: if the valuation is more than 5 years old, or pre-dates the post-2020 construction cost surge, the building is almost certainly underinsured. Ask the committee when the next valuation is scheduled.
- Verify the valuation was done by a qualified quantity surveyor: a replacement cost valuation by a registered quantity surveyor with professional indemnity insurance is far more reliable than an estimate by the committee, the strata manager, or the insurer’s automatic indexation.
- Confirm the sum insured includes all ancillary costs: demolition, site clearance, debris removal, architect fees, structural engineer fees, council compliance, temporary shoring, and professional fees should all be included — not just the rebuild cost.
- Raise it at the AGM if concerned: any owner can put a motion on the AGM agenda requesting a new replacement cost valuation. A full valuation typically costs $1,500–$5,000 depending on the building size — a fraction of the exposure if the building is underinsured.
Industry recommendation: valuations every 3–5 years
Insurance and your strata fees
Insurance is typically the single largest individual line item in a strata scheme’s admin fund budget, representing roughly 10–20% of total strata expenditure. For context, a typical strata budget breaks down as:
Admin fund (~60–65% of levies)
- Building operations: 30–40%
- Repairs & maintenance: 10–25%
- Insurance: 10–20%
- Utilities: 10–20%
- Strata administration: 5–10%
Capital works fund (~30–35% of levies)
- Long-term building maintenance
- Major repairs and replacement
- 10-year capital works plan items
When insurance premiums increase, strata levies increase. A building that saw a 30% premium increase will need to pass that cost through to owners via higher quarterly levies. This is one reason why buildings in cyclone zones or with combustible cladding have seen strata fees rise sharply in recent years, even without any increase in other operating costs.
Smaller buildings (under 50 lots) tend to allocate a larger proportion of their budget to insurance and administration, because the fixed costs are spread across fewer owners. A 10-unit building pays the same base premium as a 10-unit portion of a much larger complex, but cannot benefit from the same economies of scale.
Insurance is the easiest line item to benchmark
Frequently Asked Questions
Related Guides
What Do Strata Fees Cover?
A breakdown of what your strata levies pay for — admin fund, capital works fund, common area maintenance, insurance, and more.
How Are Strata Fees Calculated?
How strata managers calculate your quarterly levies — unit entitlements, budgets, special levies, and what drives costs up.
Average Strata Fees in Australia
Typical strata fees by state, property type, and building size — what's normal, what's high, and what to watch for.
Strata Fees in Sydney — What to Expect
Sydney-specific strata fee ranges by suburb, building type, and age. Benchmarks for apartments, townhouses, and new developments.