Strata Insurance: How To Prepare For Rising Premiums

Insuring your property is one of your Owners Corporation’s non-negotiables. It simply has to be done as per the Owners Corporation Act VIC 2006.

However, some customers may have noticed that premiums for cover have been rising at a steady rate recently.

OWNERS CORPORATION TIPS - STRAIGHT TO YOUR INBOX
I acknowledge that by providing my name and email, I consent to Strata Plan sending me a monthly newsletter.
Whether you call it an Owners Corporation, a Body Corporate or Strata Title, shared living is becoming the norm for more and more Australians. Regardless if you're an owner-occupier, investor or a tenant, Strata Plan's monthly newsletter will keep you up-to-date with new laws and best practice for apartment, townhouse and unit developments.
We hate spam. Your email address will not be sold or shared with anyone else.

Strata Plan sat down with CHU Strata Insurance Business Development Manager Scott Allen to chat about the state of the strata insurance market and what is causing the rises.

A PRICE FOR EVERY RISK AND A RISK FOR EVERY PRICE

There is a range of factors that affect the cost of premiums for each individual property.

These can range from the number or nature of past claims or the age of a building, but there are a number of market-wide factors that can help shape the general trend of insurance prices.

CHU Strata Insurance Business Development Manager Scott Allen said there would be price increases across the board for the foreseeable future.

“There’s always going to be a cycle to insurance. You’re going to have times where prices are cheap and times where prices are expensive,” Mr Allen said.

“At the moment, we’re in what we call a hard market cycle, simply due to the number of claims that have been happening across the board over the last few years and the fact that prices have actually gone down over the last few years.

“Prices needed to become increased to become sustainable. Prices have been going up slowly, it hasn’t been a sharp increase, which you sometimes see after large claim events.”

BUDGET FOR INCREASES

Mr Allen said that it was important that Owners Corporation’s budget for increases in their insurance premiums over the next 12 months.

“Owners Corporations should generally be able to get away with budgeting for between 10-20 per cent, depending on what their individual experience is like,” Mr Allen said.

“Premiums just need to become more sustainable to ensure claims can be paid for and coverage is there for the OC.

“As always, there’s a price for every risk and we have to make sure the price reflects the risk of that site.

“Even when prices go down, the average cost of a claim doesn’t. The cost of labour and parts goes up year on year on year and the premium increases are simply reflective of that.”

ADDITIONAL COVER TO SOFTEN THE BLOW

While insurance premiums are increasing, some insurance companies are increasing the scope of coverage provided.

CHU, for instance, is now including coverage for floating floors as part of their standard coverage.

“From the middle of March for residential properties and mid-July 2018 for commercial properties, CHU is actually including floating floors as part of our standard coverage,” Mr Allen said.

“If you’ve got an existing policy with CHU and your renewal is after these dates, or your policy incepts after these dates, you’ll have floating floor coverage.

“We’re one of the few insurers that provides this in the strata place and we believe this is a big benefit as we’re starting to see them more and more often.

“Historically, they’ve been excluded, simply due to the Act, but we understand the need to have them covered and have done so.”

For more articles on Owners Corporation Insurance, check out this dedicated section of our website. Feel free to chat with our Insurance Team by using the General Enquiries form below.

The information provided above is general in nature. Please consider your own and your Owners Corporation’s circumstances before acting on any information provided here.

Make an Enquiry

If you would like to contact us with any queries please complete the form below and we will respond to you within 2 business days.

(If you don't know your Plan Number, click here. You can also find your Plan of Subdivision Number on your fee notice)

"
( * ) Required Fields