Commercial Strata
Insurance.

Commercial strata insurance is a policy arranged by an owners corporation or body corporate to cover the building and common property of a strata-titled commercial property. It covers commercial buildings such as office complexes, retail centres and industrial units where individual lots are owned by separate parties under a common strata title arrangement. It is distinct from residential strata insurance, which covers residential apartment buildings, and from commercial property insurance, which covers buildings not held under a strata title.

Commercial strata insurance is required under strata legislation in all Australian states and territories. The owners corporation or body corporate is generally required by law to arrange and maintain building insurance for the scheme. The specific requirements vary by state and the applicable strata legislation. An owners corporation that fails to maintain adequate insurance may expose itself and individual lot owners to significant financial risk following a major loss event.

Commercial strata insurance is arranged by the owners corporation or body corporate, typically through the strata committee or a strata manager acting on the committee's behalf. The cost of the insurance is a shared expense of the scheme, funded through the administrative levies paid by all lot owners. Individual lot owners or business tenants do not arrange the strata building insurance themselves, though they may hold separate business insurance for their own operations within their lot.

A commercial strata insurance policy generally covers the building and common property of the scheme, common area contents, public liability in common areas, office bearers' liability for committee members and machinery breakdown for shared plant. The exact scope varies by policy, insurer and the nature of the scheme.

Commercial strata insurance does not cover the individual business operations, contents or fit-outs of individual lot owners or tenants within their lots. Business interruption for individual tenants is also generally not covered by the strata policy. Wear and tear and gradual deterioration are excluded. Conditions and exclusions vary by policy and state.

Commercial strata insurance covers strata-titled commercial properties such as office buildings, retail complexes and industrial units. Residential strata insurance covers strata-titled residential apartment buildings. Commercial strata properties carry a more complex risk profile due to the variety of business activities carried out by tenants. Tenant mix, occupancy type and commercial use of individual lots are all factors that insurers assess when quoting commercial strata risks, and that can affect the availability and cost of cover.

Commercial property insurance is typically arranged by a single building owner who holds the property on a single title. Commercial strata insurance is arranged by an owners corporation covering a building that is strata-titled, where individual lots are owned by separate parties. The owners corporation in a strata scheme has distinct legal responsibilities and a collective insurable interest that is addressed through the strata policy rather than a standard commercial property policy.

The mix of tenants and business activities in a commercial strata building is a significant underwriting factor. A building with a restaurant, medical clinic, beauty salon or other higher-risk occupation presents a different risk profile than a building occupied entirely by professional services businesses. Insurers assess the occupancy mix when quoting commercial strata risks, and changes in tenancy during the policy period should be disclosed to us. Get in touch when a new high-risk tenant is proposed for the building.

Commercial strata insurance premiums vary significantly depending on the building sum insured, the number of lots, the tenant mix, the building type and age, the location and the claims history of the scheme. Smaller commercial strata schemes can generally attract premiums from around $3,000 to $10,000 per year. Larger buildings with complex tenant mixes or in high-risk locations can attract premiums from $10,000 to $20,000+ per year. These are general market ranges only. An accurate premium requires an underwriter assessment of your specific scheme.

Commercial strata claims can be very large. A fire in a commercial strata building can result in significant structural damage across the entire building, affecting multiple lot owners and their tenants. Building repair costs can run into millions of dollars for larger or more complex commercial buildings. Without adequate insurance and an appropriate building sum insured, a major loss could leave the owners corporation and individual lot owners facing a significant uninsured shortfall.

Underinsurance occurs when the building sum insured is less than the actual cost to fully rebuild the structure following a total loss. For commercial buildings, rebuild costs can differ substantially from market values due to complex building specifications, fit-out elements in common areas and the cost of commercial construction compared to residential. Building construction costs have risen significantly in Australia in recent years. An owners corporation should review the adequacy of its building sum insured at each renewal and consider obtaining a current valuation.

Insurers typically ask for the scheme address, number and type of commercial lots, the current tenant mix and business types, the building type, age and construction, the total floor area, the current building sum insured, details of common facilities and plant, the claims history of the scheme for the past three to five years and the current policy expiry date. When you get in touch, we will guide you through what we need and can review your current policy against the market.

Notify us as soon as possible after an event. For major structural damage, the insurer may appoint a loss adjuster to assess the scope of damage before authorising repair works. Do not authorise significant repairs or remove damaged materials without first consulting us. We will be actively involved throughout the claims process to ensure the owners corporation's interests are properly represented.

A prior claims history does not necessarily prevent a commercial strata scheme from obtaining insurance. We have access to specialist commercial strata underwriters who assess schemes individually and may still offer terms where standard insurers are reluctant. Get in touch and we can identify underwriters with genuine appetite for schemes with a claims history and present the steps taken to manage risk since prior claims.