STRATA “ PROPERTY ALL RISK INSURANCE FOR MULTIPLE HOMEOWNERS “
Strata title is a form of ownership devised for multi-level apartment blocks and horizontal subdivisions with shared areas. The ‘strata’ part of the term refers to apartments being on different levels, or “strata”.
Strata title was first introduced in 1961 in the state of New South Wales, Australia, to better cope with the legal ownership of apartment blocks. Previously, the only adequate method of dividing ownership was company title, which suffered from a number of defects, such as the difficulty of instituting mortgages. This term also applies to house-type strata title units in Australia.
Other countries that have adopted the Australian system (or a similar variant) of apartment ownership include :
- Canada (Alberta, British Columbia)
- South Africa
- Abu Dhabi (under draft as at 2010)
Other countries have legislation based on similar principles but with different definitions and using different mechanisms in their administration. Strata Title Schemes are composed of individual lots and common property. Lots are either apartments, garages or storerooms and each is shown on the title as being owned by a Lot Owner. Common Property is defined as everything else on the parcel of land that is not comprised in a Lot, such as common stairwells, driveways, roofs, gardens and so on.
Lot owners need to understand how insurance arrangements work in strata and community title schemes. These arrangements vary from jurisdiction to jurisdiction and often from building to building. The managing agent or secretary should be able to assist in this regard.
In a strata title situation, in very general terms, the body corporate is responsible for the following insurances:
- The building and outbuildings
- Common property public liability
- Workers compensation
- Voluntary workers
Lot owners are, in turn, responsible to insure the contents of their lots, as well as covering themselves against personal liability. Even the question of contents is not without its problems.
Issues arise as to whether carpets or wall coverings are part of the building or its contents. And what about the kitchen cupboards and hot water system? These are the issues a lot owner needs to address when considering the type and extent of insurance coverage they require. Some insurers offer policies that “dovetail” with each other. In other words, the items not covered under the body corporate policy are clearly covered under the contents policy. Where different companies issue the policies this “dovetailing
OFFICE BEARER LIABILITY
an executive member of an Owners Corporation, it may be worth considering Office Bearers Insurance. Such Insurance provides financial protection in the event that committee members become personally liable for actual or alleged wrongful acts.
What other insurance may an owners corporation take out?
(1) An owners corporation may insure any property that is not required to insure by this Part and which it has an insurable interest.
(2) An owners corporation may take out insurance, at its own expense, in respect of either or both of the following :
(a) damage to property, death or bodily injury for which a person holding the office of chairperson, secretary, treasurer or member of the executive committee of the owners corporation could become liable in damages because of an act or omission, committed or omitted in good faith, in performing the functions of that office,
(b) misappropriation of money or other property of the owners corporation
While the clause states obtaining Office Bearers Insurance is not compulsory, at The Strata Agency we strongly recommend Executive Members take out the insurance for their own protection.
The role of an Executive Committee Member is accepted on a volunteer basis and the position carries enormous responsibility and personal risk for individuals. Committee Members potentially risk their personal assets and savings in the event of Civil Actions or Regulatory Breaches.
Therefore the level and type of insurance cover is extremely important in consideration of the politics, legalities and complexities in managing the affairs of an Owners Corporation.
Whilst Public Liability cover will protect the Owners and Committee members for claims of personal injury and/or property damage, the policy will not indemnify Office Bearers for claims of financial loss as a result of actual or alleged wrongful acts.
Obtaining Office Bearers closes this gap in cover and provides financial security to all Committee members.
It is important to note that the Office Bearers section of your policy will not cover you for claims or circumstances which are known prior to the inception of this policy cover.
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