If you own an apartment in Australia, your strata insurance premium has likely jumped more than 50% in the past four years — and you may not know exactly what it covers. The average Sydney strata premium rose from $1,200 per unit in 2022 to $1,850 by mid-2026, a 54% increase that lands directly in your annual levies. For a typical owner, that’s an extra $650 a year that comes out of your pocket, whether you’ve made a claim or not.
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This article is general information only and does not constitute professional advice. For your specific situation, consult a qualified professional.
Strata insurance is mandatory in every Australian state and territory, but the rules, coverage limits, and costs vary significantly depending on where you live and how your building is managed. Many owners assume the policy covers everything inside their unit. It doesn’t. And with premiums rising faster than most household budgets, it’s worth understanding what you’re paying for and what you’re not. Here’s what you actually need to know.
Let’s get a definition on the table. Strata insurance is the policy taken out by the owners corporation (the body corporate) that covers the building structure, common property, and public liability for the whole scheme. It’s not optional — but it’s also not the same as your own contents cover.
What I tend to notice is that most owners don’t realise how much of their unit falls outside the strata policy. Once you see the gap, it’s easier to decide what extra cover actually makes sense.
State-by-State Insurance Requirements Across Australia
Every state mandates building insurance, but the minimum public liability cover, valuation rules, and exemptions differ. A two-lot scheme in NSW can opt out by unanimous resolution. A similar scheme in Queensland can’t. That difference matters when you’re comparing levies between buildings.
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| State | Building Insurance | Minimum Public Liability | Key Exemption |
|---|---|---|---|
| NSW | Mandatory — full replacement value | $20 million | Two-lot physically detached buildings may exempt by unanimous resolution |
| VIC | Mandatory — valuations every 5 years for prescribed OCs | Not specified in Act | Two-lot subdivisions exempt; VCAT can grant exemption |
| QLD | Mandatory — full replacement including demolition and professional fees | $10 million per event | Varies by plan type |
| WA | Mandatory — all buildings in the scheme | $10 million | Must insure against fire, storm, lightning, explosion, earthquake; closest available cover if insurance unavailable |
| SA | Mandatory | Not specified | Fidelity guarantee mandatory if admin or sinking fund exists — cover must be max balance of last 3 years or $50,000 |
| TAS | Mandatory — entire site on one policy for full rebuild cost | Not specified | Individual lot policies not compliant; penalty up to 50 penalty units |
| ACT | Mandatory for most — Class B can exempt if each unit insured individually | Still required even if building exempted | Must register exemption with Registrar-General |
Claims costs now eat up 40% to 60% of every strata premium dollar, according to industry data. Natural perils and attitudinal claims (the kind that come from misunderstandings about what’s covered) are the two biggest drivers. Add in rising construction costs and skilled worker shortages, and it’s clear why the 2026 market outlook points to continued pressure, even with a soft market and new underwriters entering the space.
What I’d weigh here is whether your building’s claims history is working for or against you. A single water damage claim in an older building can lift the whole scheme’s premium for years. Worth asking your strata manager what the last three years of claims look like before you assume the next renewal is just a “market adjustment.”
The Gaps That Cost Owners the Most
Most of the expensive mistakes I see come from a single assumption: that the strata policy covers everything inside the unit. It doesn’t. And the gap can be thousands of dollars when something goes wrong.
Assuming your personal contents are covered
Your strata policy covers the building structure, common property, and fixed items like built-in kitchen cabinetry and bathroom fixtures. It does not cover your furniture, electronics, clothing, carpets, curtains, blinds, or freestanding appliances. A burst pipe that floods your unit? The structural repair is covered. Your ruined sofa and laptop? That’s on you. National average premiums are around $981 a year, but contents cover for a typical two-bedroom apartment runs $200–$400 a year — and many owners skip it, only to find out the hard way when a water leak or break-in happens.
Renovating without telling the owners corporation
If you installed new kitchen cabinetry, upgraded the bathroom, or laid floating timber floors, your strata policy may not cover those improvements. The reason is simple: the sum insured was calculated based on the original fitout, and the owners corporation wasn’t notified of the increased value. Some schemes require owners to declare improvements above a certain dollar threshold. If you’re planning a renovation, check your scheme’s by-laws first and make sure the building’s sum insured is updated. A neighbour’s renovation can affect your cover too in surprising ways.
Not checking the broker’s commission structure
The ACCC referral over alleged insurance broker misconduct in the apartment sector has put a spotlight on how premiums are set. Some brokers received undisclosed commissions or volume-based incentives from insurers, inflating premiums by up to 20% in certain schemes. That cost gets passed through to you in higher strata levies. Buildings with active owners corporations that hold annual general meetings and publish financials average 15% lower strata costs. Worth asking your strata manager for a breakdown of the insurance premium, including any broker fees or commissions, before you vote on the renewal.
Ignoring the impact on your mortgage
Higher strata levies directly reduce your borrowing capacity. For a $600,000 mortgage at 6.5%, a $20,000 annual strata levy (instead of $12,000) can cut your borrowing power by $8,000–$15,000. In the first half of 2026, 12% of apartment refinance applications were rejected or delayed due to excessive strata costs, and 18% of apartment owners with mortgages were in severe mortgage stress — spending over 45% of pre-tax income on mortgage and strata costs combined. That’s up from 12% in 2023.
What You Still Need to Insure Yourself
Once you know what your strata policy does and doesn’t cover, the next step is deciding what gaps to fill. Here’s what most apartment owners need to think about.
Contents insurance for your unit
Your personal belongings — furniture, electronics, clothing, carpets, curtains, blinds, freestanding washing machines, and removable air conditioners — are your responsibility. So are light fittings you installed yourself that aren’t hard-wired. A basic contents policy typically covers theft, fire, storm damage, water damage from burst pipes, and accidental damage. It also includes personal liability cover for incidents that happen inside your unit that aren’t the strata scheme’s responsibility. Premiums for a standard apartment contents policy usually run $200–$400 a year, depending on the sum insured and your location.
Landlord insurance if you’re renting it out
If you rent your unit to a tenant, your strata policy won’t cover loss of rent, malicious damage by tenants, or legal liability for injuries to tenants or visitors. Landlord insurance fills that gap. It covers your fixtures and fittings, loss of rental income if the property becomes uninhabitable, tenant theft, and legal costs for tenancy disputes. Many lenders now scrutinise strata insurance documents more closely during refinancing, so having your own landlord policy in place can also help with the landlord vs tenant responsibility breakdown when a claim arises.
What to check before renewal
When your strata renewal notice arrives, don’t just look at the total. Ask for a breakdown of the insurance premium, broker fees, and any commissions. Request at least three quotes from different insurers — some regulatory reforms being considered would make this a legal requirement. Check that the sum insured reflects the current rebuild cost, not the original purchase price, especially if the building has been renovated or if construction costs have risen sharply in your area. Buildings with active owners corporations that hold AGMs and publish financials tend to have lower and more stable premiums.
What’s ahead for the market
The soft market that started in late 2025 is expected to continue into 2026, with good risks potentially rolling over at the same rate or receiving discounts. A new underwriter is also expected to enter the market mid-year, adding extra capacity. However, climate change, rising reinsurance costs, and the growing frequency of extreme weather events mean the long-term trend is still upward. The Cyclone Reinsurance Pool has helped manage premiums in northern Australia, but the September 2025 review found no change to strata premiums from the pool. Meanwhile, the NSW Strata Defects Survey that began in 2025 may lead to enhanced regulation — and potentially higher disclosure requirements for buildings with known defects. The bushfire-prone areas survival guide covers what to expect if you’re in a high-risk region.
Frequently Asked Questions
Does strata insurance cover my floorboards or carpet? ▾
What happens if my renovation is not declared to the owners corporation? ▾
Can I opt out of strata insurance if my building is small? ▾
How do strata insurance costs affect my ability to get a mortgage? ▾
What is the Cyclone Reinsurance Pool and does it affect my premium? ▾
Do I need landlord insurance if I rent out my apartment? ▾
What the Shifting Market Means for Your Next Move
The strata insurance market is in a rare moment: competition is softening premiums for well-managed buildings, but climate risk and construction costs are pushing the long-term trend upward. The difference between a building with an active owners corporation that shops around and one that renews blindly can be 15% or more on the annual premium — that’s $150–$300 a year back in your pocket. The regulatory push for mandatory commission disclosure and multiple quotes could reshape the market further, potentially reducing premiums by 10–15% over two years according to Actuaries Institute estimates. The owners who stay informed and ask the right questions at renewal time are the ones who keep more of their money.
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 False Sense of Security: Common Property Insurance Myths Debunked for Australians.
Sources and Further Reading
Rising Premiums? Proven Strategies to Lower Your Property Insurance Costs — Practical steps for reducing your overall property insurance costs, including strata-specific tips.
Is Your Neighbour’s Reno Affecting Your Property Insurance? Aussie Law Explained — A closer look at how renovations in one unit can affect the whole building’s insurance position.
Strata Fee Calculator (2025). Strata Insurance Explained. 🔗
Resolute Property Protect (2026). Strata Insurance Market Outlook 2026. 🔗
Arrivau (2026). Apartment Insurance Broker Scrutiny, Strata Costs & Mortgage Impact. 🔗
