Major weather events across Queensland in recent years have brought the topic of body corporate insurance into sharper focus.

For many owners of a property, or for those who live in a community titles scheme (CTS), knowing who is responsible for insurance can be confusing.

So, it’s important to understand the insurance responsibilities of an owner or tenant and that of the body corporate.

There are several different types of insurance policies a body corporate must take out to fulfil its legal obligations under the Body Corporate and Community Management Act 1997.

The body corporate must take out insurance to cover damage caused, in certain circumstances, to the common property or body corporate assets as well as public liability insurance.

Common property includes land and structures jointly owned and maintained by the body corporate.

This may include:

Body corporate assets are items owned by the body corporate, and include, but are not limited to fixed assets such as built-in BBQs and outdoor structures and movable assets which include gym equipment, gardening tools, and billiard tables.

Public liability insurance protects the body corporate against claims for injury, death, or property damage occurring on common property or involving body corporate assets.

Examples of incidents covered include:

Building insurance covers the physical structure of a building including permanent fixtures, fittings and improvements.

It will typically cover structural elements such as walls, ceilings, floors, windows, doors, and roofing and would also include bathroom fixtures (e.g., toilets, showers, basins, and sinks), fixed tiling and built-in kitchen fixtures (e.g. cooktops, ovens, benchtops, and built-in cupboards.

However, it does not cover personal belongings, removable fixtures, or general maintenance.

The survey plan your scheme is registered under will determine who is responsible for building insurance.

If you are unsure about which survey plan you are under, contact Titles Queensland to get a copy of your survey plan. 

Under a building format plan, the body corporate must insure each building that contains an owner’s lot (e.g. a unit or apartment) for full replacement value.

Under a standard format plan where there are common walls, the body corporate must insure each building that shares a wall with another building for full replacement value.

Alternatively, under a standard format plan that has freestanding lots (not sharing a wall), each lot owner is responsible for their own building insurance.

Because the body corporate is not obliged to take out insurance of buildings in a standard format plan where the buildings do not share a common wall, a voluntary insurance scheme can be set up as an option for owners to participate.

If you’re part of a voluntary insurance scheme, your contribution will depend on:

If you wish to take part in a voluntary insurance scheme, you must tell the body corporate the full replacement value of the building to be insured.

You must also comply with any requirements in line with the body corporate’s decision to setup the voluntary insurance scheme and comply with the insurance policy.

Insuring for full replacement value means the property or items must be sufficiently insured to cover costs to restore (or replace) to an as-new condition.

This includes the costs to reinstate or replace the insured buildings, including but not limited to removal of debris, cleaning costs, planning and professional fees.

The insurance policies for the building/s, common property and body corporate assets mustprovide for restoring the property to its full replacement value.

In addition, insuring to the full replacement value means insuring for damage as well.

If the body corporate is responsible for insuring buildings in the scheme, it must have the buildings re-valued at least every five years for full replacement costs.

Each owner pays a share towards the cost of a valuation which is proportionate to their share of the building insurance premium.

Under a voluntary insurance scheme, the lot owner must obtain an independent valuation from a quantity surveyor or registered valuer stating the full replacement value of their building.

The body corporate must take out insurance for damage from storms, earthquakes, fire, lightning, water, glass breakage, damage from impact (e.g. fallen trees), malicious acts, and riots.

This includes water damage from burst pipes or leaks, vandalism, hail, and smoke damage.

The body corporate must be insured for damage from water which may include floods or flooding.

You will need to check whether flood damage is included in your policy and if not, you will have to ask for it to be added if required.

To add flood cover to the body corporate’s building insurance, you need to ask the committee to include it in the next annual insurance policy.

If it is a restricted issue for the committee, it can be decided by ordinary resolution at a general meeting.

If the committee will not consider your request, you can source an alternative insurance policy which includes flood cover and propose a motion at the next general meeting where annual insurance is considered.

Insurance premiums are raised through leviescollected annually from each lot owner and paid into the body corporate’s administrative fund. 

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

You can find your lot entitlements in your community management statement (CMS). If you don’t have a copy, you can contact Titles Queensland to get one.

Lot entitlements represent a lot owners proportional share or ownership in a body corporate and influences their share of costs.

In a community titles scheme, owners contribute to different types of body corporate insurance costs based on their lot entitlements. There are two types of lot entitlements, and each affect how insurance costs are shared:

Interest schedule lot entitlements determine how much an owner contributes to insurance for common property and body corporate assets (such as the building structure, shared facilities, and other insured assets).

If a lot has a higher interest schedule lot entitlement, the owner will pay a larger share of these insurance costs.

Contribution schedule lot entitlements determine how owners share the costs of general body corporate expenses, including public risk insurance (which covers liability for injuries or damage occurring on common property).

If a lot has a higher contribution schedule lot entitlement, the owner will pay a larger share of these costs. 

As outlined above, the interest schedule lot entitlements and contribution schedule lot entitlements influence each owner’s share of insurance costs.

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

You can find your lot entitlements in your CMS. If you don’t have a copy, you can contact Titles Queensland to get one.

To calculate your contribution, look for the number that corresponds to your lot in the interest column.

In the following example, lot 3 has an interest schedule lot entitlement of 1. The total entitlements are 10. This means lot 3 will contribute 1/10 of the total building insurance costs (i.e. if the building premium was $100, lot 3 will contribute $10).

Lot 5 has an interest schedule lot entitlement of 3. The total entitlements are 10. This means lot 5 will contribute 3/10 of the total building insurance costs (i.e. if the building premium was $100, lot 5 will contribute $30).

If an improvement to your lot causes the body corporate’s insurance premium to increase, you may be responsible for covering the additional cost. This also applies to upgrades on common property where you have exclusive use.

You must tell the body corporate (so the insurer can be notified) as soon as possible after making any improvements, including details of the changes and their cost. If you fail to do so, or if your improvement is unauthorised, you may be liable for any repair or replacement costs that are not covered by insurance.

For example, if you install a new pergola over your patio and it is later damaged in a storm, but you didn’t notify the body corporate, the insurer may refuse to cover the repair costs, leaving you to pay out of pocket.

The responsibility for paying the insurance excess depends on the circumstances of the claim.

For example, if a lot is damaged due to an issue originating within that lot (e.g. a water leak from a pipe in an internal wall), the lot owner would typically pay the excess.

If the damage occurred due to something that was a generally a body corporate responsibility to maintain, for example, a water leak in a common property pipe, it would generally be reasonable for the body corporate to cover the excess.

As a general guide:

An example where the body corporate might find it reasonable to pay the insurance excess would be where a water leak in a pipe located inside in a boundary structure, making it a body corporate responsibility to maintain, causes damage to a single lot. Because it is considered a common property pipe that has caused damage to the lot, the body corporate may decide to pay the excess.

Read Common Ground Issue 44 for more information on insurance excess including case studies. 

Any commission a body corporate manager receives for an insurance policy must be disclosed at the annual general meeting. This information must be attached to the meeting notice or the proposed administrative fund budget to ensure transparency and awareness among all members regarding any financial benefits linked to the insurance policy.

A commission or benefit must also be disclosed before the body corporate decides to take out the policy.

The body corporate must also provide details about the policy, including the coverage amount, type of insurance, premium cost, excess payable, and policy expiry date.

Additionally, disclosure of the name of the insurer and any brokers or intermediaries involved is required.

If your duplex is registered under a building format plan or shares a common wall with the lot next door, the body corporate is legally required to have insurance for body corporate assets, common property, public risk, and any building that contains a lot. If one owner refuses to contribute to the insurance costs, they are not fulfilling their legal obligation to the body corporate.  

Adjudicators have previously ordered, in cases such as Lincoln [2017] QBCCMCmr 587, where a lot owner who failed to pay their share of body corporate insurance, to pay their portion. If this happens, you may need to apply for dispute resolution, if your attempts of trying to resolve the issue have failed.

More information about body corporate insurance can be found on our website.