Owners Corporations in Melbourne have been warned that having building insurance is not an excuse to neglect your building’s most important assets. Often, owners attend Annual General Meetings and question the costs of maintenance and servicing, particularly with insurance there to cover any breakdowns of assets. Please read below for all the important information you need to understand why maintenance and repair are vital alongside insurance protection.

Navigation of the Content

Part 1. Why You and Your Owners Corporation Should Not Rely on Insurance Alone

Part 2. Legal Responsibilities of Owners Corporations

Part 3. The Importance of Regular Maintenance

Part 4.  FAQs about Relying on Building Insurance Alone to Protect Your Property

Part 1. Why You and Your Owners Corporation Should Not Rely on Insurance Alone

CHU Strata Insurance Business Development Manager Scott Allen said the most common reason for denying claims in the strata industry is because of a lack of maintenance or repair.

“Our number one exclusion and the number one exclusion for most strata insurers I would hazard would be wear and tear or gradual deterioration because of a lack of maintenance,” he said.

“Your insurance is only ever there for something that is unforeseen, accidental or unexpected to occur."

“Anything that has happened over time or because of a lack of maintenance is not going to be covered. "

“You see stuff that you would hope was covered being declined for, which is something you don’t want to happen.”

Part 2. Legal Responsibilities of Owners Corporations

Mr. Allen said there seems to be a common misunderstanding between property owners with respect to their duties to ensure their properties are well maintained and in a good state of repair.

The Owners Corporation Act (VIC) 2006 is also quite clear on this point. Section 4 of the Act states that the Owners Corporation has the following functions:

(i) to manage and administer the common property;

(ii) to repair and maintain;

(iii) the common property;

(iv) the chattels, fixtures, fittings and services related to the common property or its enjoyment;

(v) equipment and services for which an easement or right exists for the benefit of the land affected by the owners corporation or which are otherwise for the benefit of all or some of the land affected by the owners corporation;

Furthermore, the Act makes it clear that the Owners Corporation must repair any damaged property or services.

Part 3. The Importance of Regular Maintenance

“A great analogy we like to use is cars,” Mr Allen explained.

“Lots of people understand their car. They understand that even though you can’t see inside the engine, if you don’t put oil in that engine, it’s going to eventually damage the car and it’s not going to work.

It’s the same with your property. If you don’t maintain it and you don’t upkeep it or do the things you need to do to keep water issues with subsidence or issues with structure occurring, you’re going to end up with damage that unfortunately, isn’t covered by your insurance.”

Part 4.  FAQs about Relying on Building Insurance Alone to Protect Your Property

Why can’t insurance cover property damage caused by poor maintenance?

Because insurance is designed for unforeseen, accidental, or unexpected events—not gradual wear and tear or neglect.

What are the legal obligations of an Owners Corporation in property maintenance?

The Owners Corporation Act (VIC) 2006 requires OCs to manage, repair, and maintain common property, fixtures, fittings, and essential services.

How can regular maintenance help Owners Corporations avoid denied claims?

By preventing gradual deterioration, water damage, and structural issues, ensuring that claims are valid when accidents or unforeseen events occur.

Conclusion

Insurance is a vital safeguard for Owners Corporations, but it cannot replace the responsibility of proper maintenance and repair. The law clearly outlines that maintaining common property and essential services is an Owners Corporation duty. Neglecting these obligations can lead to denied insurance claims, unexpected costs, and long-term property damage. A proactive approach to upkeep not only protects your building but also ensures peace of mind for all owners.

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