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Insurance premium and excess

A body corporate must take out insurance for its community titles scheme. Each owner must pay part of the costs for that insurance (i.e. the premium).

The body corporate collects money for the insurance premiums as part of owner contributions to the administrative fund. These are collected each year.

Premiums for building insurance

How much you (as an owner) pay towards the building insurance depends on what type of survey plan your body corporate scheme is registered under.

Contact the Titles Registry Office to get a copy of your scheme’s registered survey plan.

Read more about building insurance.

Building format plan

If your scheme is registered under a building format plan (or volumetric format plan of subdivision), your share of the insurance premium is based on the interest schedule lot entitlements.

Standard format plan

In a standard format plan, if the body corporate has to insure buildings with common walls, your share of the insurance premium relates to the cost of reinstating the buildings on your lot.

If your body corporate sets up a voluntary insurance scheme, and you decide to take part, you must pay an amount that relates to:

  • the value of your building as a part of the total replacement value of the buildings insured under the policy
  • what you do on your lot and how that affects the total risk covered by the policy (e.g. if you store chemicals which could be a fire risk).

Adjusting building insurance premiums

In some cases the body corporate can change the amount an owner pays towards the insurance premium.

The body corporate can do this if:

  • the lot has better fittings and fixtures than other lots and that affects the premium
  • improvements have been made to the common property which benefit the lot and that affects the premium
  • what is done on the lot increases the total risk covered by the insurance policy (e.g. you must pay more if you store flammable chemicals for your business, and the insurance premium is higher because there is a greater fire risk).

Premium for common property and assets insurance

What you pay for insurance of the common property and body corporate assets is based on the interest schedule lot entitlements.

Premium for public risk insurance

What you pay for body corporate public risk insurance is based on the contribution schedule lot entitlements.

Changes that affect insurance premiums

Improvements to lots

You must tell the body corporate if you make improvements or changes that could affect the insurance premium.

This includes improvements to:

  • your lot
  • the common property, for the benefit of your lot

or

  • an area of common property where you have exclusive use.

You must give the body corporate details of the improvements and how much they cost.

This must be done as soon as possible after the improvements have been made.

If you do not tell the body corporate, you may have to pay for any repair or replacement costs that are not covered by insurance.

Use of lots

You must give the body corporate details if your lot is used in a way that is likely to affect the premium for the body corporate’s building insurance or public risk insurance.

Excesses

The body corporate can decide to take out an insurance policy where an excess has to be paid on an insurance claim. An excess is an amount of money paid (by the body corporate or an owner) towards a claim you make on the insurance policy.

The excess must not create an “unreasonable burden” on the owners of individual lots.

Who pays the excess

Who pays the excess on an insurance claim depends on a number of things. For example, if the body corporate claims on its insurance because a lot has been damaged by water from a leak in that lot, the lot owner would normally pay the excess.

However, if the damage to the lot happened because the body corporate did not properly maintain the common property, it would be reasonable for the body corporate to pay the excess.

As a guide, if the event affects:

  • only 1 lot—the owner should pay the excess unless the body corporate decides that it is unreasonable for them to do so
  • 2 or more lots—the body corporate should pay the excess unless the body corporate decides it is reasonable for the excess to be paid by 1 or more of the affected lots
  • 1 or more lots and the common property—the body corporate should pay the excess unless the body corporate decides it is reasonable for the excess to be paid by 1 or more of the affected lots.

Further questions?

If you have further body corporate questions you can submit an enquiry or phone the information service on 1800 060 119 (freecall).

We cannot give legal advice or rulings—we can only give you general information on body corporate legislation.

Last updated
7 February 2018
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