Insurance - Are you Covered?
27 May 2019

We’ve noticed a growing trend in increased premiums and excesses, with a number of insurers actually declining to provide quotations for insurance in some cases. So, the Blackburne Strata team have been in discussions with two of Perth’s leading strata insurers to get clarification on the where the insurance industry is heading in the coming years.

Q – So what has changed?

A – Insurers are advising that the strata insurance industry as a whole is becoming even more selective about what strata schemes they will offer to provide insurance to. They are trying to mitigate their risks and protect themselves against an abundance of superfluous claims. As well as raising premiums, we’re seeing additional excesses being applied for circumstances such as water damage claims.

Therefore, it is expected that for at least the next 12 months, insurance premiums will continue to increase and as such, Strata Companies should budget accordingly.

 

Q – How can we prevent increases?

A – Plan, Fund and Do!

Insurance should not be relied upon to fix the root cause of a problem. If you’ve had multiple water leak claims but are not taking a holistic approach with preventative/rectification measures, then your premiums and/or excesses will increase.

If your Strata Company is planning remedial action for the whole building / complex, and you are planning to include preventative measures for the future, inform the insurance company so they are aware that their risk is lowered and should adjust their premiums accordingly.

The upcoming changes to the Strata Titles Act will also legislate a 10-year forecast be undertaken and revised at least every 5 years in order to ensure your complex is planning for the future benefit of the complex.

While this change in legislation has passed, it isn’t in place just yet, so it is better to be proactive, so you are prepared when it does happen. Not only is there a financial benefit, but all owners be assured that their Council of Owners are acting in the best interest for everyone and looking after one of their largest assets.

 

Q – What documents can we give to the insurers to help with this?

A – While there isn’t a single document that will demonstrate the planning and implementation of a whole of complex plan, below are some documents that may assist the insurers assessment of your complex:

  • Minutes of Council of Owners meeting, as well as General Meetings showing;
  • decisions on holistic works planned
  • funding approval for engaging contractors and undertaking the work
  • when levies are going to be raised to have the works completed (both Admin Fund and Reserve Fund)
  • 10-year forecast
  • Builders scope
  • Engineers report (broken down into layman’s terms – remember, your insurance provider is not an engineer and may not understand the technical jargon)
  • Building contracts with an identified start date

By putting some thought and action into the ongoing and preventative maintenance for your strata complex, you can help ensure that your asset is looked after and prevent being rejected for strata insurance.

Should you have any further questions about this topic, please speak to your Blackburne Strata Manager at your earliest convenience. We’re always happy to help.

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