Living in an apartment, townhouse, or unit in Australia means two insurance policies sit between you and a total loss — and most residents have only thought about one of them. Strata insurance, taken out by the owners corporation, covers the building shell and shared spaces. It does not cover what you keep inside your home or the upgrades you have made to it. Around 40–60% of every strata premium dollar goes toward paying claims, according to industry data, yet the bulk of that money protects common property — not your furniture, your kitchen renovation, or your video doorbell at the front door.
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This article is general information only and does not constitute professional advice. For your specific situation, consult a qualified professional.
That gap — between what the building policy covers and what you own inside your four walls — is where surprise costs live. A burst pipe on the floor above can destroy your carpet, electronics, and clothing. Without your own contents policy, the strata claim only covers the building repair. You are left covering everything else out of pocket. Here’s what you actually need to know.
Key Differences and the Term That Matters Most
The distinction between these two policies comes down to one question: who owns what? The owners corporation owns the building shell and common property. You own everything inside your lot — and any improvements you have made to it. Strata insurance covers the first group. Contents insurance covers the second. A standalone home insurance policy on a house does both in one package, but that single-policy model does not apply in a strata scheme. What I tend to notice is that people moving from a house into a unit assume the body corporate policy works the same way. It does not. You need two policies where you used to need one.
If you currently rent out your apartment or plan to, the same split applies — the tenant’s contents are not covered either. That is worth weighing against your obligations as a landlord, especially if you have upgraded the unit with new fixtures. A separate contents insurance policy bridges the gap that strata leaves open.
What Strata Insurance Actually Pays For vs What It Skips
The table below shows exactly where the line falls. Every row is a real coverage category you might assume is included — until you read the fine print.
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| What’s covered | Strata insurance | Your contents policy |
|---|---|---|
| Building shell (walls, roof, floors, windows) | ✓ | ✗ |
| Common areas (lifts, hallways, pools, gyms, car parks) | ✓ | ✗ |
| Public liability in common areas | ✓ | ✗ |
| Your furniture, clothing, electronics, appliances | ✗ | ✓ |
| Renovations and fixtures you added | ✗ | ✓ (with endorsement) |
| Flood cover for your lot | Often excluded | Optional add-on |
| Wear and tear, gradual damage, mould | ✗ | ✗ |
The most consequential number in this whole topic is not a rate or a band — it is the word excluded next to renovations and fixtures in the strata column. If you spent $30,000 on a new kitchen and a fire destroys it, the strata policy covers the building structure only. You are out $30,000 unless your contents policy specifically listed those improvements. State rules vary — NSW may treat permanently attached fixtures as part of the building, while Queensland follows the by-laws — but the safest position is to assume nothing inside your lot is covered by the body corporate.
The cost of strata cover itself is rising. Insured extreme weather losses in Australia reached $22.5 billion over the five years to 2025, a 67% increase over the prior period, and claims from catastrophic events have risen nearly 50% in the past five years. Those costs feed into your quarterly levies. Meanwhile, a separate contents policy for a typical one-bedroom unit might cost a few hundred dollars a year — a fraction of what a single uninsured loss could cost you.
The Gaps That Cost Unit Owners the Most
The research points to three places where the mismatch between expectation and coverage hurts people most often. Each one has a straightforward fix once you know it exists.
Assuming “home insurance” means the same thing in a strata scheme
People coming from a standalone house buy a home insurance policy and think they are done. But a standard home policy covers both building and contents — and in a strata scheme you already have building cover through the body corporate. Paying for building insurance you do not need wastes money. Worse, if you fail to disclose that the property is strata-titled, the insurer may refuse a contents claim later. The fix: buy a stand-alone contents policy and tell the insurer the property is part of a strata scheme. That single step avoids double-paying and ensures your claim will be honoured.
Not checking flood and storm-surge cover
Ground-floor units and apartments in cyclone-prone areas face a specific risk. Many strata policies exclude flood or charge a significant premium for it. The same goes for contents policies — flood cover is typically an optional add-on. A ground-floor unit that floods from a storm surge may get nothing from either policy if you did not check and opt in. The fix: request a certificate of currency from the strata manager to see what the building policy includes, then compare it with the exclusions on your own contents policy. If flood cover is missing from both, you are exposed.
Weather-related losses now account for nearly 0.75% of Australia’s GDP, up from 0.25% in the late 1990s. That rising share means insurers are pricing flood and storm risk more aggressively each year. If you live in a known risk area, checking this single exclusion could save you tens of thousands of dollars.
Overlooking underinsurance and special levy risk
When the building’s sum insured is too low to cover a full rebuild, the owners corporation must recover the shortfall — often through a special levy on all owners. That can run into five figures per unit. Meanwhile, if your contents are underinsured, any claim payout is reduced proportionally. A unit with $50,000 of contents insured for only $30,000 would receive only 60% of any loss. The fix: review the strata policy’s sum insured annually — you are entitled to ask for it — and make sure your contents sum insured matches the full replacement cost of everything you own, including upgrades.
Checking Your Cover — What to Look For in Your Policy
This section walks through the practical actions that bridge the gap between what you think is covered and what actually is. Each one takes less than an hour and can be done from your kitchen table.
Read the strata policy’s certificate of currency
Ask your strata manager for the latest certificate of currency — it lists the insurer, the sum insured, the excess, and the key inclusions and exclusions. Compare it against the by-laws of your scheme, because some states (like NSW and Queensland) define owner responsibilities differently. The certificate will tell you whether flood cover is included, what the excess is, and whether specified fixtures in common areas are covered. If anything is unclear, ask the strata manager before you buy your own contents policy. You need to know exactly where the building policy stops so you know where your policy must start.
Buy contents insurance that matches your actual belongings
A standard contents policy covers furniture, clothing, electronics, and appliances. But many policies cap cover for specific items like jewellery, bicycles, and tools unless you list them separately. Go room by room with a notepad or a home inventory notebook and estimate the replacement cost of everything you own. Include soft furnishings, kitchen equipment, books, and any portable electronics. Then add the value of improvements you have made to the unit — new kitchen, bathroom renovation, built-in wardrobes, upgraded flooring. Insure that total figure, not a round number you guessed at.
Check the excess on both policies
Strata policies often carry a high excess — $1,000 to $5,000 is not unusual, and it can be higher for specific perils like water damage or storm. Your contents policy has its own excess, typically $200–$500. If a claim straddles both policies (a burst pipe damages the building structure and your furniture), you could be paying two excesses. Ask your insurer whether they offer a combined excess or reduced excess for strata residents. Some do, and it can make a meaningful difference to your out-of-pocket cost.
Keep an eye on the 2026 strata insurance market changes
According to the Whitbread market outlook, a new insurer is expected to enter the strata market in mid-2026, which could increase capacity and keep premiums competitive for lower-risk properties. At the same time, a NSW ban on strata manager commissions is under review, with a final report due by March 2026, and some companies are already phasing out commissions in favour of fixed management fees. These changes may affect how strata insurance is priced and sold in the coming year. If you are on the committee or simply want to stay informed, now is a good time to understand what your strata manager currently earns from insurance placements.
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| Factor | Strata insurance | Your contents insurance |
|---|---|---|
| Who arranges it | Owners corporation / body corporate | You (individual policy) |
| How you pay | Through quarterly strata levies | Direct to insurer (annual or monthly) |
| Who manages claims | Strata manager or committee | You (direct with insurer) |
| Cover for your upgrades | No (fixtures added by owner excluded) | Yes (if listed or endorsed) |
| Cover for personal liability (inside your lot) | No | Yes (standard feature) |
| Optional add-ons available | Machinery breakdown, employee dishonesty, legal expenses | Flood, accidental damage, portable contents, specified valuables |
If you are unsure whether a particular item or improvement is covered by your contents policy, the safest move is to call your insurer and ask specifically: “Is this covered under my standard policy, or does it require a listed endorsement?” Getting that answer recorded in an email or chat transcript saves arguments later.
FAQ — Common Questions on Strata and Contents Cover
If I live in a strata unit, do I need any insurance at all? ▾
Does strata insurance cover my new kitchen renovation? ▾
What happens if the building is underinsured and there’s a total loss? ▾
Does my contents insurance cover me if a guest is injured inside my unit? ▾
Can the strata manager’s commission affect my premium? ▾
Are lithium-ion batteries in my apartment a fire risk for insurance? ▾
The Underinsurance Trap That Hits Through Your Levy
The most forward-looking point from this research is not about contents cover — it is about building cover. Even if your personal policy is perfect, a strata scheme that is underinsured creates a financial liability you cannot opt out of. With insured extreme weather losses rising 67% over five years and construction costs under persistent pressure from labour shortages and volatile materials, rebuilding a strata complex today costs far more than the same building did a decade ago. The owners corporation’s sum insured should be reviewed annually, not left on autopilot. If you are on the committee, push for that review. If you are not, ask for the latest valuation. A few minutes of scrutiny could save you a levy that wipes out years of savings.
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 Storm Season Survival: Essential Property Insurance Tips for Australians.
Sources and Further Reading
Contents Insurance: Don’t Make These Costly Mistakes in Your Inventory — A practical guide to valuing your belongings accurately so your contents policy actually covers what you own.
Building Code Changes and Your Insurance — Explains how updates to Australian building codes can affect rebuild costs and your strata sum insured.
Mashmagazine (2025). Strata Insurance Australia: What It Covers. 🔗
Stratajem (2025). Strata Insurance vs Home Insurance: Key Differences Explained. 🔗
Whitbread Insurance Brokers (2025). Strata Insurance Market Outlook 2026. 🔗
Insurance Council of Australia (2025). Future-Proof Australia: Climate Action. 🔗
