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In Victoria when you purchased your unit you will have received an Owners Corporation Certificate in your Section 32 documentation. This provides all the current insurance details. If the owners corporation (or body corporate in the old language) is not professionally managed you should certainly enquire as to the status of insurance.
Unfortunately, all too often owners purchase their unit and immediately take out building insurance, only to discover that their unit is already comprehensively insured. Not only have they spent money unnecessarily, but have created a potentially dangerous ‘double-insurance’ situation.
The Owners Corporations Act (2006) requires that your strata takes out specialist strata insurance on all the buildings on the Plan of Subdivision. This insurance automatically includes a minimum of $10 million of Public Liability insurance over the common property, which includes the driveway (s).
This comprehensive insurance policy taken out with one specialist insurer ensures the safest and the most cost-effective insurance option. You should be aware that there are some obvious risks if duplicate insurance policies exist.

  • The potential for these insurance companies to dispute which company is liable, holding up repairs for a lengthy period.
  • The specialist policy will have replacement cover whilst the second policy may simply offer a payout, resulting in that owner having to arrange their own re-building.
  • A range of scenarios which can affect two units with a common wall where conflicting insurance policies result in dispute and difficulty.
  • Such scenarios are entirely unsatisfactory if the buildings are connected by common property, resulting in the buildings not being rebuilt at the same time, and disputes about who pays for the adjoining walls and services.
All of the above depend on the buildings being adequately insured. If any of the joined buildings are under-insured then the owners may not get their full pay out, meaning they can’t afford to rebuild.
If in doubt, you should contract a strata specialist for advice.

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Fallen Garage Ceilings

All too often we see plasterboard ceilings in garages that have noticeably come away from their fixings, often resulting in complete failure of the entire ceiling.

Unfortunately, the reinstatement of a collapsed garage ceiling often falls outside the scope of CHU’s insurance policy coverage for accidental damage if the cause is due to any of the following common factors:

  • Incorrect application or spacing of fixings (nails/screws) and/or stud adhesive

  • Poor-quality glue or adhesive product

  • High humidity and differential thermal movement of the building materials over a period of time (materials expanding and contracting due to changes in temperature)

​The garage is exposed to humidity more than other rooms in the home as there is generally no insulation in the ceiling space above and it is exposed to the elements when the garage door is open. Inadequate condensation control (e.g. lack of ventilation) can also contribute to this.

Without correctly applied stud adhesive, screws and/or nails are unable to hold the weight over an extended period of time.

As soon as one nail or screw fails, this puts more weight on the surrounding fixings, and over time they too will fail.

The same issue arises when fixing points for the ceiling plasterboard are incorrectly spaced, as it results in additional load on the fixings if they are too far apart, or inadequate in number.

When a ceiling loses one or two fixing points, this places additional stress on the remaining fixings which are not designed to restrain the additional load, and consequently this can lead to ceiling failure.

What are the warning signs?

Warning signs of the ceiling being under stress prior to collapse include:

  • A loud cracking sound in your ceiling;
  • Sagging or dropping of the plasterboard sheeting and/or the cornice; or seeing a pronounced ‘V’ where the plasterboard sheets meet or join. This can be caused by the fixings in the centre of the plasterboard sheets letting go
  • Visual cracking and/or small circles (nail pops) on your ceiling. If you can see small circles or blisters
  • (about the size of a shirt button) scattered along a straight line it is a sign that your plasterboard sheeting is pulling away from the ceiling joists.

What you can do:

  • Regularly check the garage ceiling for any changes, such as sagging, cracking or drooping. Often signs of the ceiling beginning to fail are evident, but as most of us don’t spend a lot of time in our garages this isn’t readily noticed. Make a point of having a quick look over the ceiling whenever you are in there.

  • If you do notice any warning signs, look to engage a tradesperson (either privately, or through your Owners Corporation) to attend and look at the issue. They should be able to identify if the ceiling is in danger of collapse and act accordingly.

  • Mitigate your losses. If you notice warning signs of a ceiling collapse, and are awaiting the attendance of a contractor, take reasonable precautions to protect anything valuable in your garage. This includes of course, your vehicle, and any items you may be storing in your garage that would suffer damage in the event of a ceiling collapsing. Consider alternative parking arrangements, such as parking on the street until you are certain the ceiling is safe.

  • If your building is still within the relevant builders warranty period, and the cause of your ceiling collapse is found to be a faulty workmanship related issue, you may wish to consider pursuing a claim against the builder for the necessary rectification.


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The importance of Strata Insurance Valuations

23 Jun 2021

Owners Corporations need to be asking themselves whether they have sufficient insurance in place to protect their strata building and property for when the unexpected happens.
The law
Under current Victorian strata legislation* an Owners Corporation must insure for its buildings full replacement value, and an independent insurance valuation of the building replacement cost must be completed at least every five years for a prescribed Owners Corporation. Building valuations for strata properties are not only required by law, but they also make good sense. It is a legal obligation and responsibility for an Owners Corporation to ensure that there is no dollar shortfall for the rebuilding of their strata property, should the worst happen. If there is a shortfall, then it is the responsibility of the Owners Corporation to meet this shortfall.
Changes in the law:
The long awaited regulatory reform of Victorian strata legislation has finally passed through Parliament and will come into effect on 1 December 2021.
Under the new legislation it will be a legal requirement for Owners Corporations of 3 lots and over to have a building valuation done at least every five years.  This is a big shift as the expiring legislation only stipulated this for “certain prescribed” Owners Corporations.
Why you need valuations
Apart from the legal requirements accurate valuations of assets ensures the correct sums insured are in place thereby avoiding the risk of underinsurance or conversely, unnecessary over insurance costs.
The level of insurance that is required tends to increase with time, as you put different materials, construction costs and professional fees increase each year, these factors must be altered in your coverage to reflect the changes and ensure the group remains adequately covered.
More recently fluctuations in the market for building materials and skilled trade’s people has seen many buildings currently underinsured. Therefore, a detailed valuation will account for more than just the replacement value, they will factor increased building costs due to CPI increases, natural events and other disasters.
Plus, in the event of a claim, having a professional insurance valuation can greatly simplify and streamline the claim process.
What does an Insurance Valuation cover?
A valuation of a strata building for a replacement cost assessment should include:

  • Cover the buildings, common property and each lot’s fixtures and improvements
  • Public liability insurance for the common property
  • Other factors including inflation, professional fees, cost escalations, compliance with regulations of building development at current standards, demolition, cost of external items (pavements, fencings, recreation facilities which are on-site) and lastly, the removal of debris.
Additional things to consider with an Insurance Valuation
Often, there’s a dangerous assumption that the valuation covers all scenarios but this is simply not the case. It’s worth checking that your instructions to a professional valuer are clear and complete and:
  • Covers the known and anticipates the undisclosed e.g. upgrades to fixtures and improvements for every lot within your strata block’
  • Considers any environmental hazards, planning/restrictions or dangerous materials which may prevent the building being rebuilt or delay the rebuilding process,
  • Anticipates the rise in costs of labour and materials – remembering that the rise in rebuilding costs outstrips the rise in CPI by almost double.
  • Allowances for cost escalation caused by floods, cyclones and other disasters
It is also important to note:
  • That a valuation is carried out frequently - every two to three years is a common practice among strata properties
  • Your Building Sum Insured amount is reviewed each year between valuations in light of events that could impact building and repair costs.
This article was supplied by CHU Underwriting Agencies
1300 361 263

*Owners Corporation Act 2006
CHU Underwriting Agencies Pty Ltd (ABN 18 001 580 070, AFS Licence No: 243261) acts under a binding authority as agent of the insurer QBE Insurance (Australia) Limited (ABN 78 003 191 035, AFS Licence No: 239545). Terms, conditions, limits and exclusions apply to the products referred to above. Any advice in this article is general advice only and has been prepared without taking into account your objectives, financial situation or needs. Before making a decision to acquire any product(s) or to continue to hold any product we recommend that you consider whether it is appropriate for your circumstances and read the relevant Product Disclosure Statement which can be viewed on this website or obtained by contacting CHU directly.
Date issued: June 2020