What is the right coverage for your strata property?
Water damage is the number one reason strata owners make an insurable claim, so some strata corporations are now lowering their insurance costs by increasing their deductibles and forcing individual condo owners to pick up the cost. This is disturbing trend.
Many strata owners are of the impression that because the strata corporation has insurance, they do not require any additional coverage. The strata corporation’s property insurance is for common property, common assets, buildings shown on the strata plan and fixtures build or installed on a strata lot if built or installed by the owner developer are part of the original construction of the strata lot.
Additional coverage is extremely important and not a huge expense. Additional insurance covers things like personal property and special assessments. For example, a dishwasher overflows in a strata and causes water damage to common property. The strata corporation can sue the strata owner for the cost of the strata corporation’s insurance deductible even if the strata owner was not “at fault”. These deductibles can be of significant expenses as deductibles of $25,000 are common and can range up to $100,000 or more!
As a strata owner (whether you are an investor or owner occupied) you should review the strata corporation’s insurance policy annually to ensure you have adequate coverage for insurance deductibles.
Remember: Strata fees only pay for the strata corporation’s insurance; strata fees do NOT pay homeowner’s or tenant’s insurance.