Commercial Strata Insurance: What You Need To Know

Commercial strata insurance is intended to provide protection for commercial properties under a strata title, such as multi-tenanted business sites and retail stores, whose insurance needs are not necessarily satisfied by a standard commercial property insurance policy.

Regardless of the size or type of strata property, the diverse activities of tenants in mixed-tenancy commercial strata buildings may make acquiring sufficient insurance coverage for specific business needs challenging. It is crucial to get customised business strata insurance from a broker that has worked with multi-family dwellings in order to have comprehensive protection where you just pay for the coverage you require.

What Exactly Is Commercial Strata?

If you buy a commercial unit with a strata title, it implies that you’ll own the team; however, you will be responsible for sharing ownership of the standard amenities on the property. Parking spaces, elevators, restrooms, and other services may be found at these locations.

For the continuous management, repair, and care of these shared facilities, often known as common property, every unit owner will pay monthly strata levies. A Council of the Strata Company, or its designated Strata Manager, is responsible for collecting these levies and overseeing the upkeep of the building and its common spaces.

How Can You Determine If You Need Commercial Strata Insurance?

Commercial strata insurance aims to safeguard common property, which is defined as business (rather than residential) property that is collectively held by a corporate body, club, or strata title. The expense of strata insurance, typically shared by the numerous owners of a strata title, should be in place if you own property as a member of any of these organisations. The details of the necessary strata insurance are subject to the terms and circumstances that are particular to each state and area.

What Is Covered By Commercial Strata Insurance?

As usual, plans will vary across insurers; however, the following are some common parts of coverage for commercial strata insurance policies:

Legal responsibility: This covers expenditures related to physical injury and property loss or damage.

Equipment failure: This affects mechanical, electrical, and electronic plants.

Protected property: The destruction or loss of insured property, including protection against theft, vandalism, intentional mischief, etc., and storm damage.

Voluntary employees: This section covers compensation paid to employees who were seriously hurt or incapacitated while volunteering on your premises.

Catastrophe protection: This refers to an unexpected increase in the cost of rebuilding covered property after a disaster and is relevant in Australia should the Insurance Council of Australia approve a catastrophe code.

Assurance Guarantee: If any of your money is the target of fraudulent misappropriation, this will activate.

Office-holder responsibility: This applies to any legal obligations resulting from an officeholder’s improper conduct.

What Does Commercial Strata Insurance Not Cover?

Exclusions vary from policy to policy; however, most insurers won’t provide coverage for the following:

  • Anything involving nuclear weapons or warfare
  • Discretionary taking of insured property
  • The destruction or loss of electronic data
  • Intentional property damage

Also, you should be aware that each part of insurance will be subject to restrictions.

Terrorist acts could also be omitted. It’s crucial to remember that this exclusion will vary depending on the occupancy rate. It’s feasible that there will only be coverage if business usage is less than 50% of the floor space. Suppose there is less than 50% occupancy. In that case, the owner’s company should examine the amount of terrorist-related risk exposure and decide if it would be advantageous to purchase a separate insurance policy that covers the terrorist threat.

A Terrorism Act and Australian Reinsurance Pool Corporation (ARPC) could provide coverage if commercial use occupies more than 50% of the floor space. To guarantee that you and your insurer have sufficient capital to meet the claims resulting from a terrorist attack, the ARPC serves as an insurer to your insurer.

What Should You Be On The Lookout For With Commercial Property Insurance For Strata?

As much information as possible regarding your property’s design should be gathered since insurers want complete disclosure of potential issues. This may be something widespread like asbestos or less evident like a particular brand of cladding or equipment with a higher risk level.

Although there may be some overlapping, having both kinds of coverage is best to safeguard your company. Keep in mind that commercial property insurance is distinct from liability insurance.

Reviewing all paperwork as soon as you get them is a wise general recommendation. You should also be given a certificate of currency outlining your insurance limitations. Continue to check them often, especially if something changes with the structure or the renters.

Regarding underinsurance, once again, if it is discovered that you did not insure your property for a fair value, you may be liable for a portion of the repair or replacement expenses in the case of a loss. You may reduce your risk by using a competent insurance valuation specialist to ensure your property is covered for the right amount.

Are There Any Other Details You Should Know?

In terms of what is covered and what isn’t, there are two critical bits of information that don’t fit either category.

First, it’s crucial to understand that just because you have commercial strata insurance doesn’t mean you can disregard other company insurance. The primary ones are property, workers’ compensation, and general liability insurance.

The second thing you should know is that location will impact the cost of business strata insurance. Property in places that are more likely to experience storms, cyclones, earthquakes, or fires will undoubtedly have a higher premium than those that are thought to be less risky.

Strata or body corporate insurance protects communal property and items managed by a strata title. The strata fees and responsibilities of strata unit owners include strata insurance premiums. Strata insurance must cover public responsibility for injuries on shared property. Contact your insurance broker if you have questions regarding commercial strata insurance or how it applies to your circumstances.