During the 18th century, in the days before municipal fire departments, building owners paid insurance companies to send their own fire fighters to stop a blaze.
Bad luck if the first fire fighters on the scene didn’t belong to your insurer – they wouldn’t fight the fire and would just let your place burn!
These days, if you have an insurance certificate, you might assume your building is fully insured, but this is not necessarily the case.
If you have an insurance certificate, you might assume your building is fully insured, but this is not necessarily the case.
A body corporate and owners corporation is responsible for the following insurances:
Owners corporation building insurances need to cover all common area facilities and shared utilities, including carpets in common areas, hot water systems, light fittings, toilet bowls, sinks, shower screens, cupboards, internal doors, stoves, common air conditioning systems and intercoms.
Another potentially overlooked area is the fact that the property needs to have a valuation every five years and committee needs to ensure the building is insured for that value.
Contents insurance can be a tricky area for many committees and lot owners. What’s covered and what’s not?
The answer is, it all depends.
Broadly speaking, everything within the lot which doesn’t form part of the building structure, is the responsibility of the lot owner (and possibly the tenant). Contents include things like clothes and personal items, kitchen and bathroom appliances, light fittings, carpets and wall coverings.
We highly recommend owners talk to their insurance broker and the executive committee before taking out a policy so everyone is clear what is covered.
And that’s not the end of the insurance maze. Did you know that it is not obligatory for a person conducting work on your property to have insurance?
You may have the three other essentials – public liability, workers compensation and voluntary workers cover –but that may not protect you if work is carried out by uninsured contractors.
An owners corporation can take out contractors insurance, but prevention is better than the cure. Always insist that contractors have insurance and all the appropriate licences before work commences.
Did you know there is insurance especially for committee members?
There are two types:
These are separate insurances but are related. Office Bearers Insurance protects the Executive Committee from liability and compensation claims for actual or alleged wrongful acts.
However, please be aware, this may not cover misappropriation of funds. That is specifically covered by Fidelity Insurance which covers embezzlement or fraudulent misappropriation of body corporate/owners corporation funds.
We recommend that executive committees meet annually with their insurance brokers to review all policies to make sure they still meet their needs and expectations.