Strata Insurance 101

This article is based on content from The WA Strata Magazine by LookUpStrata, published in July 2025, pages 34-35. For more information, visit The WA Strata Magazine.

What you need to know

Understanding strata insurance is essential for both strata council members and lot owners. While it's a legal requirement for all strata companies, the type and scope of insurance can vary significantly depending on the nature of the scheme (strata scheme or a survey-strata scheme). This guide outlines the key insurance responsibilities, the major types of coverage, and what owners and strata managers need to consider to stay protected and compliant.

Legal Requirements for Strata Insurance

All strata companies in Western Australia are legally required to carry insurance. 

At a minimum, strata companies must hold insurance for all insurable assets against risks such as fire, storm, lightning, explosion, and earthquake. These assets must be covered at their full replacement value, which is determined through regular valuations by a licensed professional or to a reasonable limit.

In addition, strata companies must hold public liability insurance of at least $10 million to cover injury or property damage occurring on common property. However, for larger or higher-traffic schemes, this minimum may be considered inadequate, and a higher limit is often recommended.

Who is responsible for Insuring What?

One of the most common sources of confusion in strata communities is determining who insures which parts of the property. The responsibilities differ depending on whether the scheme is a strata scheme or a survey-strata scheme, as outlined here:

In survey-strata schemes, owners are typically responsible for insuring their individual lots, including the buildings. The strata company generally only insures the common property. In some cases where common property is limited to things such as fences and airspace it may be deemed that common property insurance is not necessary. 

It’s important to understand that strata insurance does not cover your personal possessions.

Items within your lot that would fall out if the property were turned upside down i.e. furniture, appliances, or personal effects, are considered contents and must be insured separately. To protect these belongings you’ll need a contents insurance policy or landlords insurance if the property is occupied by tenants.

The Role of an Insurance Broker

Navigating strata insurance can be complex, and this is where a strata insurance broker becomes invaluable. Brokers hold an Australian Financial Services Licence (AFSL) and act as an intermediary between the insurer and the insured. Their duty is to act in the best interests of the strata company, providing professional advice, negotiating policies, and helping manage claims. A broker can identify coverage gaps, ensure appropriate disclosure, and support the scheme through the entire insurance cycle.

Key Types of Strata Insurance

Public Liability Insurance

This provides protection for the strata company against legal claims arising from injury or damage to third-party property occurring on common property. The policy also covers legal costs associated with defending such claims. However, public liability insurance excludes certain events such as workers compensation claims, damage caused by pets, construction over specific values (unless pre-approved), and pollution-related claims.

Office Bearers Legal Liability

This cover protects individual members of the strata council, such as the Chairperson, Secretary, or Treasurer, from personal liability if they are sued for a wrongful act while acting in their official capacity. It provides cover for legal defence and associated costs, but excludes known risks, intentional misconduct, failure to comply with the law, and penalties related to conflicts of interest.

Workers Compensation Insurance

If a strata company hires anyone, such as a cleaner, gardener, or caretaker, it must provide workers compensation insurance. This is a legal requirement and must cover anyone who qualifies as a "worker" under legislation. Workers compensation provides protection when someone is injured while performing duties for the strata or under its instructions. This cover includes statutory entitlements and potential claims made under common law. Even part-time or casual workers must be covered under this policy.