In one of the greatest debates in strata living, the battle over the boundaries between insurance coverage and maintenance responsibility has long been one of the most persistent sources of confusion for property owners.

While insurance is a great safety net for your property, it’s not a magic fix for a lack of maintenance which can ultimately lead to disputes, costly repairs, and rejected claims.

In our recent industry webinar, we partnered with insurance specialist CIB to unpack the practical realities of body corporate insurance and maintenance, and how the two interact in everyday building management. Through this interactive panel discussion, we explored how insurance decisions are made, how maintenance impacts claims, and the common misconceptions often faced by property owners.

Two systems, one building

At the core of strata governance are two parallel obligations:

• The body corporate’s duty to maintain common property
• The strata insurance policy that responds to defined insured events

While both parties are interconnected, they also operate independently where maintenance is proactive and ongoing, while insurance is reactive and event-driven. 

A key distinction is that insurance responds to sudden damage, while maintenance exists to prevent deterioration in the first place. When those responsibilities are not clearly understood or executed, that’s where the trouble starts. 

What strata insurance can cover – and what it doesn’t

Strata insurance typically provides cover for the building and shared infrastructure, including:

• Structural components of the building
• Common property such as roofs, walls and driveways
• Shared facilities including lifts, pools and fire systems
• Permanent fixtures within lots such as built-in ovens and fixed bathroom fittings
• Public liability for incidents occurring on common property

A critical requirement is that buildings must be insured for their full reinstatement value, ensuring the full cost of rebuilding is covered rather than simply the market value. However, a significant amount of confusion stems from assumptions about what insurance includes. Here’s what it doesn’t cover:

• Personal belongings such as furniture and clothing
• Freestanding appliances
• Curtains, blinds and carpet
• Tenant rent default unrelated to insured damage
• Certain air conditioning systems

When maintenance becomes an insurance issue

Imagine this. One day, a severe storm comes rolling in, causing water ingress across multiple apartments. Investigation reveals that roof drainage systems were partially blocked, and maintenance issues had been previously identified but not addressed due to budget delays. 

Surely in this case, this is a clear cut insured event– but hold your paperwork. 

Because what’s undeniable is that poor maintenance has also contributed to the extent of damage. 

What does that mean? It means that potential outcomes may include:

• Partial claim acceptance
• Reduced settlement
• Increased excess
• Higher future premiums. 

Therefore, even when insurance applies, maintenance history plays a significant role in the results of that claim. 

Excess allocation: Who pays?

Insurance excess allocation is one of the most common points of confusion in strata living. The excess is the amount payable before the insurer covers the rest of a claim, and determining who pays often depends on where the issue started. 

To put it simply:

• If the damage originates within a lot, it’s the lot owner’s responsibility.
• If the damage originates from common property, it’s the body corporate responsibility.

Insurance is one of the best ways to protect your investment, but it’s not a magic fix without regular maintenance going hand-in-hand. While insurance protects against unforeseen events, it is the ongoing maintenance of a building that determines how effectively those claims are handled, priced and accepted. 

Because a well-maintained building is not only safer and more resilient, it’s also more insurable and cost-efficient over time.