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This article is general information only and does not constitute legal advice. For your specific situation, consult a qualified solicitor or tenancy service.
Strata insurance is mandatory for owners corporations in Australia, yet many lot owners don’t realise the policy doesn’t cover their personal belongings or renovations inside their own unit. That gap becomes painfully clear only after a burst pipe floods a kitchen or a fire damages custom cabinetry. Here’s what you actually need to know.
Whether you’re a lot owner, a tenant, or sitting on the owners corporation committee, the rules around strata insurance have shifted significantly in 2025 and 2026 — especially in New South Wales. Rising construction costs mean rebuilding estimates are climbing, and if your policy’s sum insured hasn’t kept pace, you could be left seriously short. I’ve watched too many people assume “the building is covered” without ever reading the policy document. That assumption is where the trouble starts.
This guide walks through your rights and responsibilities, what the policy actually covers, where the gaps are, and what the recent legal changes mean for you. For a broader look at how property insurance works across different housing types, you might find this piece on deed-protected home insurance useful as a comparison point.
Understanding Strata Title Insurance and Who It Protects
Strata title insurance is a single policy taken out by the owners corporation — sometimes called the body corporate — that covers the building’s structure and all common property. That includes roofs, walls, foundations, hallways, lifts, stairwells, gardens, car parks, and security systems. The premium is paid from strata levies, which are split among lot owners based on their unit entitlements.
The key distinction most people miss: this policy does not cover anything inside your individual lot that isn’t part of the original structure. Your furniture, appliances, clothing, and any renovations you’ve made — new kitchen benchtops, upgraded flooring, built-in wardrobes — are your responsibility. You need separate contents insurance for those.
What I tend to notice is that people confuse “the building is insured” with “everything I own is covered.” That misunderstanding leads to nasty surprises after a fire or flood. The policy also includes public liability cover, which protects the owners corporation if someone is injured in a common area — say, a visitor slips on a wet hallway floor. But again, that doesn’t extend to incidents inside your private lot.
For a deeper look at what happens when claims go wrong, this article on common property insurance issues covers the pitfalls worth knowing about.
Why Getting Strata Insurance Right Matters More Now
Rising building costs across Australia have pushed up construction and rebuilding expenses considerably. If your strata policy’s sum insured hasn’t been reviewed recently, it may no longer be enough to fully rebuild after a major event. Underinsurance in strata schemes is a growing concern — and it’s one that affects every lot owner in the building.
Consider this: a fire damages the common roof and several units. The owners corporation lodges a claim, only to discover the policy’s building sum is based on valuations from three years ago. Construction costs have risen 20–30% in that time. The shortfall has to be covered by special levies — meaning every owner pays extra out of pocket. That’s a scenario I’ve seen play out more than once.
The NSW reforms effective from 1 April 2026 try to address some of this. Owners corporations must now use a standard form for 10-year capital works fund plans, which forces proper long-term thinking about maintenance and insurance adequacy. Developers of new multi-storey schemes must prepare an initial maintenance schedule using that same standard form, certified by an independent surveyor, at least 14 days before the first annual general meeting.
These changes don’t just affect new schemes. Existing owners corporations need to update their capital works plans to the new standard form when revising or replacing them. If you’re on a committee, this is something to put on the agenda now, not next year. For a practical guide on navigating claims after a disaster, this survival guide on post-disaster claims is worth reading alongside this.
Where People Go Wrong With Strata Insurance
Assuming the policy covers everything inside your unit
This is the most common mistake. The strata policy covers the building structure and common property. It does not cover your personal belongings — furniture, electronics, clothing, or appliances. It also doesn’t cover improvements you’ve made, like new flooring, kitchen upgrades, or built-in shelving. If a pipe bursts and ruins your laptop and sofa, the strata claim won’t pay for them. You need a separate contents policy for that. A home contents inventory app can help you track what you own and its value, making a claim easier if the worst happens.
Not reviewing the policy’s sum insured regularly
Many owners corporations set the building sum insured when the policy is first taken out and never revisit it. With construction costs rising, that figure can become dangerously outdated. If the building is underinsured and a total loss occurs, each owner faces a special levy to cover the gap. The committee should review the sum insured annually, ideally with a professional valuation. If you’re an owner, ask to see the policy schedule at the AGM.
Ignoring the exclusions in the Product Disclosure Statement
Standard exclusions include general wear and tear, gradual deterioration, poor maintenance, intentional damage, and unauthorised building alterations. If a leak happens because the roof hasn’t been maintained for a decade, the claim may be denied. The PDS is not optional reading — it defines exactly what isn’t covered. Owners corporations should keep a copy accessible to all lot owners, not just the committee.
Failing to disclose alterations to the insurer
If a lot owner has made structural changes — knocking down a wall, adding a bathroom, extending a balcony — and the owners corporation doesn’t inform the insurer, the policy could be voided for non-disclosure. The same applies if the building’s use changes, like converting a residential unit to short-term holiday letting. Always notify the insurer of material changes. For more on how short-term letting affects coverage, this Airbnb insurance guide covers the specific risks.
→ Scroll right to see all columns
| Coverage Area | Covered by Strata Policy | Your Responsibility |
|---|---|---|
| Building structure (roof, walls, foundations) | Yes | No |
| Common areas (hallways, lifts, gardens) | Yes | No |
| Personal belongings (furniture, electronics) | No | Yes — contents insurance |
| Internal renovations and upgrades | No | Yes — contents or landlord insurance |
| Public liability in common areas | Yes | No |
| Public liability inside your lot | No | Yes — contents or landlord insurance |
Your Practical Guide to Strata Insurance Rights and Responsibilities
Check what the policy actually covers — and what it doesn’t
Start by requesting a copy of the current policy schedule and the Product Disclosure Statement from your owners corporation or strata manager. Look specifically at the building sum insured, the excess amounts, and the list of exclusions. Compare the sum insured against current rebuilding costs in your area. If the figure looks low, raise it at the next committee meeting. The policy should also be checked for optional extras like machinery breakdown cover, office bearer liability, and fidelity guarantee — these aren’t always included by default.
Understand the new NSW compliance requirements
If your scheme is in New South Wales, the reforms effective from 1 April 2026 introduce several new duties. Owners corporations must use a standard form for 10-year capital works fund plans. For multi-storey schemes — defined as three or more storeys above ground — the original owner must prepare an initial maintenance schedule using that form, certified by an independent surveyor who is a member of the Australian Institute of Quantity Surveyors or the Royal Institution of Chartered Surveyors. The surveyor must have no connection to the original owner — no family ties, employment, business partnership, or executive roles. Penalties for non-compliance reach $11,000 for individuals and $55,000 for corporations.
Know your rights if you’re facing financial hardship
If you’re struggling to pay strata levies, you have protections. Levy notices must include a standard Financial Hardship Information Statement. You can request a payment plan, typically for up to 12 months. The committee must respond within 28 days and cannot charge a fee for setting up the plan. If the committee refuses unreasonably, you can take the matter to the NSW Civil and Administrative Tribunal (NCAT). This is a right worth knowing about — too many owners simply fall behind and face debt collection when a payment plan could have been arranged.
Keep records of all alterations and maintenance
If you make changes to your lot — even minor ones like installing new flooring or adding shelving — keep receipts, photos, and any approval documents from the owners corporation. If a dispute arises later about whether an alteration was authorised, your records are your evidence. The same applies to maintenance: if you report a leak or a structural issue to the strata manager, keep a copy of that communication. With the extended six-year claim period in NSW, documentation from years ago could become critical.
For landlords specifically, this furnished rental insurance guide explains how to cover contents and liability when tenants are involved.
Frequently Asked Questions About Strata Insurance
Does strata insurance cover my tenant’s belongings? ▾
What happens if the building is underinsured? ▾
Can I insure my own renovations under the strata policy? ▾
Who is responsible for arranging strata insurance? ▾
What are the new NSW penalties for non-compliance? ▾
Can I dispute a strata insurance claim decision? ▾
Strata Insurance Is Your Shared Safety Net — But Only If You Understand It
The strata insurance policy is the financial backbone of any strata scheme, but it only works well when everyone involved knows what it covers and what it doesn’t. The recent NSW reforms have strengthened owner protections, extended claim periods, and introduced real penalties for non-compliance. That’s progress. But the day-to-day responsibility still falls on individual owners to check the policy, insure their own contents, and keep records of alterations and maintenance requests. Don’t wait for a disaster to find out where the gaps are.
Remember: this article is general information only. For advice on your specific situation, speak to a qualified solicitor or tenancy adviser.
If this was useful, you might also want to read Top Tips for Maximising Your Property Insurance Coverage in Australia.
Sources and Further Reading
Duplex Landlord’s Guide to Property Insurance Tips — Practical advice for owners of duplex properties navigating insurance requirements.
Smart Tips for Container Home Insurance in Australia — A useful comparison for non-standard property insurance situations.
Auswide Insurance (2026). Strata Insurance in Australia: A Comprehensive 2026 Guide. 🔗
NSW Fair Trading (2026). Strata Scheme Reforms 2025–2026. 🔗
NSW Legislation (2015). Strata Schemes Management Act 2015. 🔗
NSW Civil and Administrative Tribunal. Strata and Community Living. 🔗
