QNA How does Insurance Work


Question: Although we have an Owners Corporation, we have no common property. How does insurance work? Do we need individual strata insurance? Should Public Liability be part of this?

I live in a home that is made up of 3 houses. It was originally a subdivision. The builder set up the Owners Corporation. There is NO common property at all, no common driveway, nothing. None of us are the original owners, so started looking into individual strata insurance.

It seems this can’t be done – well, at least not without a lot of expense. We have no meetings or anything as there is really nothing to discuss. We all pay for any/all maintenance for our own houses (which are houses, not joined units). We only need to come together once a year to pay for our portion of the building insurance.

We just noticed that there is a $10,000,000 public liability insurance added on to our policy. The conveyancer we just consulted about possibly cancelling the Owners Corporation told us that, as we have no common property, any public liability claim would be against us individually, not the body corporate. If there was a claim they would refuse to pay it as it wouldn’t have occurred on common property.

Hence I asked our broker to remove this from the policy. She told me that it is compulsory and can’t be removed. Is this correct? It doesn’t seem right to me that you have to pay insurance for something you could never claim on.Answer: As this property is an Owners Corporation, it must comply with the regulations set out in the Owners Corporation Act 2006

As this property is an Owners Corporation, it must comply with the regulations set out in the Owners Corporation Act 2006.

To answer the question we have quoted the relevant expert from the Act. Under the Owner’s Corporation Act of 2006 it states the following:-

Public liability insurance
1.     An owners corporation must take out public liability insurance for the common property in accordance with this section.
2.     The public liability insurance required under subsection (1) is insurance for any liability of the owners corporation to pay compensation in respect of—
a.     any bodily injury to or death or illness of a person; and
b.     any damage to or loss of property—
which is sustained as a result of an occurrence or happening in connection with the common property.
3.     The owners corporation must ensure that, in the insurance which the owners corporation has under subsection (2), the limit of liability is a minimum of $10 000 000, or if another amount is prescribed, that other amount, in any one claim and in the aggregate during any one period of insurance.
If owners require further clarification or have any questions about individual strata insurance, we suggest contacting Consumer affairs.

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