Strata Insurance in Australia: The Complete Owners Guide (2026)
Strata insurance is a single policy taken out by the owners corporation covering the building structure, common property, public liability and office bearers — paid from your levies. It does not cover the contents of your lot, so owners still need their own contents or landlord policy.
What strata insurance covers, who pays for it, how premiums are set, and what owners should check at each renewal — explained in plain English.
What strata insurance actually is
Strata insurance is a single policy taken out by the owners corporation (also called body corporate or strata company depending on the state) that covers the building itself and common property — not the contents inside any individual lot. Every state's strata legislation requires it for buildings with shared structure, and the premium is paid from the levies you and every other owner contribute.
It is one of the largest line items in almost every strata budget, often 25–45% of total annual expenditure. Understanding what you're buying — and what you're not — is the single highest-leverage thing an owner can do before voting on a renewal.
What a standard strata policy covers
Every reputable strata policy in Australia bundles three core covers:
Building / material damage — fire, storm, water damage, impact, malicious damage and accidental damage to the building structure, common walls, roof, lifts, pools, fencing, common-area carpet and shared fixtures.
Public liability — typically $20m–$30m, covering claims from people injured on common property (a visitor slipping in the lobby, a contractor falling on a stairwell).
Office bearers / voluntary workers — protects committee members and volunteers from personal liability for decisions made in good faith on behalf of the scheme.
Most policies also include automatic add-ons: catastrophe cover, loss of rent following an insured event, government audit costs, machinery breakdown, and legal defence expenses.
What it does NOT cover
This is where most disputes start. A standard strata policy will not cover:
The contents of your lot — furniture, electronics, clothing, jewellery
Carpet and curtains inside your lot (these are usually lot owner property under most state Acts)
Loss of rent caused by a tenant defaulting (you need landlord insurance for that)
Your personal liability as a landlord
Damage caused by lack of maintenance or gradual deterioration (rust, rot, wear and tear)
Mould and rising damp in most cases
Pest damage
Every owner who lives in or rents out a lot should hold a separate contents and/or landlord policy to fill these gaps. Owner-occupiers often underestimate how much of what they think is "the building" is actually their responsibility.
Who decides what to buy
The owners corporation, by majority resolution at the AGM. In practice three parties shape that decision:
The strata manager sources quotes (usually through a broker or underwriting agency) and presents them with comparisons.
The committee reviews, recommends, and may negotiate sum insured or excesses.
Every owner votes at the AGM to accept the recommended policy.
If you are not comfortable with what is being proposed, you can request alternative quotes — and a good strata manager will get them without pushback.
How premiums are calculated
Insurers price strata risk on four big inputs:
Sum insured — the cost to fully rebuild the building from scratch including demolition, professional fees, code upgrades and inflation. This must come from a registered quantity surveyor's valuation (legally required every 3–5 years in most states).
Location risk — cyclone, flood, bushfire and storm exposure. Buildings north of the Tropic of Capricorn or on identified flood plains pay materially more.
Building characteristics — age, construction materials, height, number of lots, presence of pools/lifts/cladding, fire safety systems.
Claims history — your scheme's own losses over the prior 3–5 years. Even one large water damage claim can push premiums up 20–40% the following year.
Since 2020, Australian strata premiums have climbed sharply due to reinsurance costs, combustible cladding remediation, and a series of catastrophic weather events. Rises of 10–25% per year are common; cyclone-exposed buildings have seen far more.
What every owner should check at renewal
Before voting yes on a renewal, work through this list:
Is the sum insured based on a current valuation (within 3–5 years)?
Has the excess changed? Higher excesses lower premiums but expose the scheme on small claims.
What is the flood, storm and cyclone sub-limit? Some policies cap these well below the building sum insured.
Is catastrophe cover included (an extra 20–30% above sum insured for rebuild cost inflation after a disaster)?
Is loss of rent cover adequate for the highest-rent lots over a realistic rebuild timeline?
Have you received at least two quotes? A good broker compares 4–6 underwriters every year.
Has your strata manager disclosed any commission they receive from the insurer or broker?
That last point matters. Strata manager commissions on insurance are legal and common, but they must be disclosed and they can create incentives that aren't perfectly aligned with yours.
How to keep premiums under control
You can't change the weather, but you can reduce the things insurers price up:
Maintain proactively. Most water damage claims come from failed flexible hoses, leaking shower membranes and blocked drains — all preventable with regular inspection.
Invest in fire and safety systems. Compliant systems and recent fire safety statements typically attract premium discounts.
Manage your claims history. Pay small repair costs from the admin fund rather than claiming on insurance where the cost is below or near the excess.
Get an up-to-date valuation. Insurers penalise underinsured buildings; being correctly insured (not over-insured) is the goal.
Tender properly. Insurance should be re-tendered every 1–2 years, not auto-rolled.
When to escalate
If you suspect your scheme is overpaying, underinsured, or that the renewal process isn't transparent, you have a few options:
Raise it at the next committee meeting and ask for the underlying broker quotes in writing.
Request a second opinion from an independent strata insurance broker (many offer free reviews).
Consider whether your strata manager is the right fit. If they cannot articulate why a specific policy was chosen, or won't disclose commissions, that's a signal.
Insurance is one of the clearest places where the quality of your strata manager shows up in dollars. A diligent manager who tenders properly, manages claims well, and communicates clearly can save a building tens of thousands a year compared to a passive one.
The bottom line
Strata insurance protects the single biggest asset most people will ever co-own. Treat the annual renewal as the important governance moment it is: read the schedule, ask questions, compare quotes, and vote with your eyes open. The premium is paid out of your levies — that makes it your money.