Around four in five strata buildings across Australia are underinsured for their full replacement cost. For owners in a unit block, that gap can translate into a special levy of tens of thousands of dollars after a major fire, storm, or flood — money that has to be raised from lot owners on top of regular strata fees.
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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 national average strata insurance premium sits at roughly $981 per lot per year, according to the CHU 2025 Strata Market Report. That sounds manageable — until you realise the policy only covers the building shell, common areas, and shared systems. Everything inside your individual lot is your responsibility, and many owners only discover that boundary after water has come through the ceiling or a kitchen fire has gutted their renovation.
Understanding where the strata policy ends and your own policy begins matters more than ever. With roughly 3.2 million strata lots holding an insured value of about $1.4 trillion, and rents in capital cities expected to climb 24 per cent over the next five years, the financial stakes for getting this boundary wrong are only getting larger. Here’s what you actually need to know.
Strata insurance is the policy taken out by the owners corporation on behalf of all lot owners. It covers the building structure and common property — the roof, external walls, lobbies, lifts, driveways, pools, and shared gardens. What it does not cover is what makes the biggest difference to your wallet.
The distinction sounds simple on paper, but I’ve noticed most people only realise how blurred the line really is after a claim gets knocked back. My first move would always be to ask the strata manager for a certificate of currency and a copy of the policy schedule — then compare it against what you actually own inside your lot.
State-by-State Rules and What They Leave Uncovered
Every state and territory in Australia requires the owners corporation to hold building insurance for a strata scheme, but the minimum coverage amounts and specific requirements vary significantly. The table below lays out the key differences.
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| State | Building Insurance Required | Minimum Public Liability | Notable Exceptions or Extras |
|---|---|---|---|
| NSW | Mandatory (full replacement value) | $20 million | Permanently attached fixtures inside lots may be covered |
| VIC | Mandatory (valuation every 5 years for prescribed OCs) | Not specified in standard requirement | Two-lot subdivisions are exempt |
| QLD | Mandatory (full replacement including demolition and professional fees) | $10 million per event | By-laws define what belongs to the lot vs common property |
| WA | Mandatory (all buildings) | $10 million | — |
| SA | Mandatory | Not specified | Fidelity guarantee mandatory if admin or sinking fund exists; minimum $50,000 or max fund balance |
| TAS | Mandatory (entire site on one policy) | Not specified | Individual lot policies are not compliant |
| ACT | Class B unit plans can opt out | Still required if common property exists | Each unit must hold individual building insurance if exempt |
The variation matters because gaps in state minimums become gaps in your personal exposure. In NSW, for instance, a $20 million public liability floor offers solid third-party protection on common property. In Queensland, the same requirement sits at half that amount. And in Victoria, prescribed owners corporations must obtain a valuation every five years — a rule that directly addresses the underinsurance problem — but two-lot schemes can skip it entirely.
The real sting is the underinsurance figure. Eight in ten strata buildings do not carry enough cover to fully replace the structure. If a fire takes out the block, every owner gets billed for the shortfall through a special levy. That’s not a theoretical risk — it’s a factor in how lenders assess a building’s financial health and can even affect whether you can sell your unit.
The Three Coverage Gaps That Cost Owners the Most
The boundary between what strata covers and what you cover is where most of the financial surprises live. These three gaps cause the largest out-of-pocket costs.
Renovations that the strata policy doesn’t know about
If you renovated your kitchen or bathroom and the owners corporation was not notified, the new fit-out may not be covered under the building policy. The sum insured was never updated to reflect the higher value. Some schemes require owners to declare improvements above a certain threshold. If a burst pipe destroys your new kitchen, the strata policy will only pay out based on the original specification — you cover the rest. The fix is to notify the strata manager in writing after any renovation and ask whether the building sum insured needs adjusting.
Personal contents and fittings that walk out with you
Furniture, electronics, clothing, carpets, curtains, blinds, freestanding washing machines, and removable light fittings are all your responsibility. So is that portable air conditioner you installed yourself. The standard test: if you could take it with you when you move, it’s not covered by strata insurance. A dedicated contents policy is the only way to protect these items. For landlords renting out a unit, a landlord policy adds cover for fixtures, loss of rent, and tenant damage.
Water damage from gradual leaks, not sudden bursts
Strata insurance typically covers water damage from a burst pipe or a sudden storm. It does not cover gradual leaks, long-term mould, or maintenance issues like a shower that has been seeping into the wall for months. Owners often assume the strata policy will pick up any water-related damage inside their lot, but the “gradual damage” exclusion is one of the most common reasons claims are declined. The distinction between sudden and gradual matters more than most people realise, and it’s worth checking how your individual accidental damage cover interacts with the strata policy’s exclusions.
If you’re unsure whether a specific item or scenario is covered — for example, damage caused by a tenant’s pet — it’s worth asking a real estate law professional to review the policy wording before a claim arises rather than after.
How to Match Your Individual Policy to What Strata Leaves Out
The goal is not to replace strata insurance — you can’t, and you don’t need to. The goal is to fill the specific gaps that your state’s requirements and your building’s policy leave open. Here are the four coverage layers to build around.
Contents insurance for your personal belongings
This covers your furniture, electronics, clothing, carpets, curtains, blinds, and portable appliances. It also covers personal liability — if someone injures themselves inside your unit, contents insurance can cover legal costs. The key is to choose a sum insured that matches the actual replacement value of everything in your lot, not a guess. Walk through each room and add up what it would cost to replace every item new.
Landlord insurance if you rent the unit out
Strata insurance does not cover tenant damage, loss of rent, or legal costs for eviction. Landlord insurance fills that gap. It covers fixtures and fittings inside the unit, loss of rental income if the property becomes uninhabitable, and legal liability for injury to a tenant. If you’re renting out a strata unit, contents insurance alone is not enough — you need a policy designed for landlords.
Notification and documentation of renovations
After any significant renovation — kitchen, bathroom, new flooring, built-in shelving — send written notice to the strata manager and request confirmation that the building sum insured has been updated. Keep a copy of that correspondence with your insurance records. Without it, you are self-insuring the value of the improvements.
Flood and storm-surge verification
Many strata policies exclude flood damage or charge an additional premium for it. If your building is in a flood-prone or coastal area, check the policy wording for “flood,” “storm surge,” and “gradual water damage.” If these are excluded or capped, consider whether your individual contents or landlord policy should include flood cover to bridge the gap. The way flood coverage interacts with strata insurance is rarely straightforward, especially for units in low-lying areas.
For owners who want to better protect their unit from theft or vandalism while it’s tenanted, a smart doorbell or security camera can help monitor access. Something like the Arlo Essential Wireless Video Doorbell gives tenants and landlords a way to see who is coming and going without hardwiring, which keeps installation inside the owner’s responsibility zone.
Frequently Asked Questions About Strata and Individual Insurance
Do I need contents insurance if I rent in a strata building? ▾
What happens if the strata policy is underinsured and the building is damaged? ▾
Does strata insurance cover my car if it’s parked in the building’s garage? ▾
Can I take out my own building insurance for my unit instead of relying on the strata policy? ▾
If I renovate my bathroom, is the new fit-out covered by strata insurance? ▾
Are pest or mould issues covered under strata insurance? ▾
The Real Cost of Assuming Someone Else Has It Covered
The most expensive assumption you can make as a strata owner or landlord is that the building policy has you sorted. With roughly 47 per cent of Australian strata properties now rented and unit values sitting $223,000 below the median house price, the margin for a surprise special levy is thin for many owners. A properly layered insurance approach — strata plus contents or landlord — costs a fraction of what a single uncovered claim can cost you. If this was useful, you might also want to read the ultimate guide to lowering your property insurance premiums in Australia.
Remember: this article is general information only. For advice on your specific situation, speak to a qualified professional.
Sources and Further Reading
From bushfires to floods: tailoring your property insurance for Aussie disasters — A practical guide to matching your coverage to the specific natural disaster risks in your region.
Essential tips for private rental home insurance in Australia — What every landlord needs to know about insuring a rental property, including the gap between strata and landlord cover.
Strata Fee Calculator (2025). Strata insurance explained. 🔗
CHU (2025). Strata Market Report. Referenced via Strata Fee Calculator.
EBM RentCover. Strata, landlord and tenant insurance guide. 🔗
Mash Magazine Australia. Strata insurance Australia: what it covers. 🔗
