( * Insurance is a subject matter of solicitation. The below subject is for reference only )
What does the law say ?
A Body Corporate has a statutory duty to maintain insurance cover.
The Unit Titles Act, Section 136(1), requires a Body Corporate to “Insure and keep insured all buildings and other improvements on the land to their full insurable value”.
- The provided policy must reinstate the damage up to the sum insured which is defined in the reinstatement insurance valuation upon which the insurance is based.
- All principal and accessory units and all common property must be insured by the Body Corporate unless all principal and accessory units in the Unit Plan are standalone units in which case the Body Corporate may by special resolution resolve that the individual owners may insure their principal and accessory units.
- The Body Corporate remains responsible for insuring the common property
The principal insurance policy as defined by Section 135(1) of the Unit Titles Act 2010 requires a Body Corporate to “Insure and keep insured all buildings and other improvements on the land to their full insurable value.”
Types of Insurance Covers
This will not apply to what insurers determine as commercial operations, such as serviced apartments, Airbnb, Book a Bach etc.
It is applicable to many parts of insurance cover, but in this context we are discussing it application in regards to Loss of Rent, Alternative Accommodation and Business Interruption Insurance cover.
How long should the indemnity be?
- A body corporate needs to carefully consider the indemnity period it is paying for. These are normally in 12 monthly lengths, such as 12, 24, 36 etc months.
- A body corporate made up of town houses, may consider that the total complex can be rebuilt in 24 months, maybe even 12 months, and therefore pay for a 12 or 24 month indemnity. While a multi-level apartment block in a city would need a minimum of 36 months, to demolish and rebuild, even then that maybe optimistic.If the rebuilding of the complex takes longer then the indemnity period, you will be without the loss of rent/alternative accommodation/business interruption cover after the expiry period. ( Insurance is a subject matter of solicitation, Kindly speak to body corporate manager for more information)
As an owner in a body corporate you must pay your body corporate levies to ensure that the body corporate can meet its obligations to pay the insurance cover.
How is the Body Corporate insurance paid?
The insurance is paid in the levy invoices sent out each year to owners.
The insurance will be discussed at the AGM, and be included in the budget, also discussed at the same AGM. Following the AGM the body corporate will levy (invoice) out to each owner their portion of the budget and give a set period of time in which to pay.