If you live in a strata building, the odds are roughly four in five that your building is underinsured. That means if a storm rips off the roof or a burst pipe floods three floors, the insurance payout won’t cover the full rebuild cost. The gap gets split among owners as a special levy. On a 40-unit building with a $7 million shortfall, that’s about $175,000 per lot. Most people don’t have that sitting in a savings account.
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This article is general information only and does not constitute professional advice. For your specific situation, consult a qualified professional.
The problem isn’t that people ignore insurance. It’s that most unit owners don’t know where their building’s policy ends and their own begins. The body corporate covers the structure and common property. You cover everything inside your four walls. But the line between those two things is drawn differently in every state, and the research shows that boundary is where the money gets lost. Here’s what you actually need to know.
Four Things to Know About Strata Insurance Before Disaster Strikes
The central concept here is body corporate insurance — the policy the owners corporation takes out to cover the building structure and common property. It’s mandatory in every Australian state and territory, and you pay for it through your strata levies. But it only goes so far.
What I tend to notice is that most owners don’t realise their body corporate policy covers fixtures only to “as built” standard. If you’ve upgraded your kitchen or installed new flooring, that’s on you. The research from Strata Fee Calculator makes this distinction clear: built-in wardrobes and fixed kitchen cabinetry are generally covered; carpets, curtains, and portable appliances are not. The four takeaways above come straight from the data on where claims actually fall apart.
Common Property vs Lot Boundaries: Who Pays for What
The single most consequential number in this topic isn’t a premium — it’s the 80% underinsurance figure. That’s the one that can land you with a five-figure special levy after a single storm.
Where the boundary falls between common property and your lot determines whose policy responds. The table below shows how three major states draw that line differently — and what it means for a typical water damage scenario.
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| State | Boundary Definition | Who Covers a Burst Pipe in a Shared Wall |
|---|---|---|
| Queensland | Internal face of boundary walls (BCCMA 1997) | Body corporate — the pipe is within common property |
| New South Wales | Internal plaster surfaces included in the lot (SSMA 2015) | Lot owner — the pipe serves the lot and sits within its boundary |
| Victoria | Owners Corporations Act 2006 definitions | Depends on the specific plan and whether the pipe serves multiple lots |
Water damage makes up about half of all strata claims, according to the Strata Fee Calculator guide. The typical excess for a water claim runs $5,000 to $10,000 — separate from the general excess of $1,000 to $2,000 for other perils. If a storm causes both building and contents damage, the body corporate handles the claim for the roof and external walls while you claim for your damaged furniture under your own contents policy. The two tracks run in parallel, and the body corporate manager coordinates the emergency response.
What I’d do with this information: check your building’s last replacement cost valuation. If it’s older than five years — or if it hasn’t been updated since 2020 — the sum insured is almost certainly too low. A new valuation from a qualified quantity surveyor costs between $1,500 and $5,000 and is the single best check against a special levy disaster.
Three Ways Strata Insurance Claims Go Wrong
Assuming the body corporate covers everything inside your unit
This is the most expensive mistake. Body corporate insurance covers fixtures to original “as built” specification only. If you’ve installed a new kitchen, upgraded bathroom tiles, or added floating timber floors, those are not covered by the building policy. The Mash Magazine guide notes that renovations create grey areas: newly installed kitchens may not be covered unless the owners corporation was notified and the sum insured updated. Your contents policy needs to cover the improved value of your unit, not just your furniture.
Ignoring the excess allocation until after the claim
When a water event damages both common property and multiple lots, someone has to pay the excess. In Queensland, Section 204 of the Standard Module says the default position is that the body corporate pays, unless it decides it’s reasonable for the affected lot owner to pay. Disputes often hinge on whether a maintenance failure by the body corporate contributed to the damage. If water ingress came from a poorly maintained roof the body corporate was responsible for, they typically bear the excess. If the cause can’t be traced to any body corporate failure, unaffected owners may push back on sharing the cost. The Lookup Strata analysis makes this distinction clear: present your case with supporting details to the committee before the claim is finalised.
Not documenting damage properly for a dual-track claim
After a major flood or building-wide pipe failure, the body corporate manager lodges the building claim while you lodge your own contents claim. If you don’t document the damage inside your lot with photos, moisture readings, and a detailed scope, your insurer has less to work with and the process slows down. The Disaster Recovery guide recommends per-lot damage reports with photos and moisture readings at multiple points so owners can file independent claims. Without that documentation, you risk having your claim denied or underpaid while the building claim moves ahead without you.
Your Action Plan When Water or Fire Damages Your Unit
Identify the source before you call anyone
The first step is determining whether the damage started in common property or within your lot. A burst pipe in a shared wall that serves multiple units is common property — the body corporate’s responsibility. A pipe that serves only your unit within its boundary is your problem. If the source is unclear, an IICRC-certified contractor’s forensic assessment can document the origin. That single report often determines which insurer pays and whether you’re on the hook for the excess. The Disaster Recovery guide notes that disputes often arise when a burst pipe in a shared wall triggers competing denials between lot and body corporate insurers, and a forensic assessment is essential.
Lodge both claims in parallel
In a major event, the body corporate manager coordinates emergency response — stopping the source, extracting water, deploying drying equipment — and lodges the building claim. You need to lodge your own contents claim at the same time. Don’t wait for the building claim to settle. Your contents insurer needs its own documentation, timeline, and scope of works. The emergency make-safe fee, typically around $2,750 ($550 platform fee plus $2,200 for the attending contractor), is billed to the body corporate and covers immediate containment. That keeps restoration independent of insurance timelines.
Escalate if the body corporate is slow to act
If common property damage isn’t being addressed, send formal written notification to the body corporate manager and committee. State legislation in every state allows managers to authorise urgent repairs without a general meeting resolution. In Queensland, you can escalate to the Office of the Commissioner for Body Corporate and Community Management. In New South Wales, it’s NCAT. In Victoria, Consumer Affairs Victoria or VCAT. Document every communication. If the body corporate fails to act on common property damage, you have the right to organise repairs to your own lot’s fixtures and internal surfaces, but you need body corporate approval for any work affecting common property or structure.
Check your building’s valuation every three years
The industry recommendation is a replacement cost valuation every three years, with annual indexation adjustments. Victoria mandates five-year cycles for prescribed owners corporations. If your building’s last valuation is older than that — or if it predates the 30% construction cost surge since 2020 — it’s almost certainly underinsured. Raise it at the next AGM. A motion for a new valuation costs $1,500 to $5,000 and is the cheapest protection against a six-figure special levy. A video doorbell camera can also help document who accesses your unit during emergency repairs, which matters if disputes arise over who caused additional damage during the restoration process.
Frequently Asked Questions
Does body corporate insurance cover my carpets and curtains? ▾
Who pays the excess if a storm damages both common property and my unit? ▾
What happens if my building’s insurance only covers 46% of the damage? ▾
Am I covered if water leaks from the unit above mine? ▾
Can the body corporate enter my unit for emergency repairs without my permission? ▾
Do I need landlord insurance if I rent out my unit? ▾
The Real Cost of Not Knowing Your Boundaries
The research is consistent on one point: the boundary between common property and your lot is where the financial surprises live. State legislation draws that line differently, policy exclusions shift it further, and underinsurance makes every gap wider. The 80% underinsurance figure isn’t just a statistic — it’s the reason a single storm can turn into a special levy that wipes out years of savings. A valuation every three years, a contents policy that covers your actual fixtures, and a clear understanding of who pays the excess are the three checks that separate a managed recovery from a financial hit.
Remember: this article is general information only. For advice on your specific situation, speak to a qualified professional.
If this was useful, you might also want to read Dealing with Insurance Claims After a Disaster: Aussie Survival Guide.
Sources and Further Reading
Strata vs Home Insurance: Understanding Your Aussie Obligations — A direct comparison of what each policy covers and where the gaps are for Australian unit owners.
Contents Insurance: Don’t Make These Costly Mistakes in Your Inventory — Practical guide on documenting your belongings so your contents claim doesn’t fall short after a disaster.
Strata Fee Calculator (2025). Strata Insurance Explained. 🔗
Disaster Recovery Australia (2026). Strata Water Damage: Lot vs Common Property. 🔗
Mash Magazine (2025). Strata Insurance Australia: What It Covers. 🔗
Lookup Strata (2025). QLD Reasonableness of Insurance Excess. 🔗
