Apartment owners insurance simplified
Unlike owning a house, where generally the only thing that separates you and your neighbours are fences and insurance is a one policy stop shop - when it comes to owning apartments life is just not simple...
In an apartment, it's clear that the walls often divide you from your neighbours, however don't forget that some times the roof and even floor can also be your property boundaries. So how do you insure what you own and not what your neighbour does?
This is why Apartment Owners need two of three types of insurance.
Policy One - Strata Insurance:
This insurance covers the building structure including anything that is permanently fitted to the building and that before you moved in, was likely already there.
This policy is arranged by the body corporate or Strata Manager (or nominated owner for smaller buildings) and should respond to things such as (and not limited to) storm and fire damage as well as water pipes bursting.
Among other important covers, it should also cover common area property, as well as liability for common areas. If a guest to your apartment trips over in a common area and gets hurt as a result of the property being in an unsafe condition - you and all of the other owners within the complex are protected by this cover should said person sues for damages.
Beware – Strata building cover may exclude carpets, curtain and blinds.
Strata insurance is generally paid equally by all owners, depending on in the size of your complex and how it is managed.
Strata insurance is compulsory under Strata Legislation in WA.
Plus One – Contents Insurance
Your contents insurance for an apartment is just the same as your standard home contents insurance.
It’s for anything you own and bring with you when moving in (including floating floorboards in some instances).
Also, Contents will generally pick up those carpets curtains and blinds.
Contents insurance is the apartment owner’s responsibility, as in, you're up for the full cost.
Plus One More – Landlords Insurance
It’s really important that you don't fall into the trap of thinking that if you rent your apartment out, you don't need to take out contents cover, to the contrary, Landlords Insurance is an absolute must.
A Landlords Policy covers things such as any contents you might have put in, however even if nothing was added after purchase, it will cover your carpets curtains and blinds - with bonus options like:
Tenants Theft and Malicious Damage (some tenants just go crazy)
Rent Default - nothing will impact your ROI (Return on Investment) like a tenant that breaches their lease
Court Costs - that you or your Property Manager incurs to get that crazy tenant out!
Loss of Rent - it's different to rent default ok. Loss of rent occurs when property damage occurs as a result of that crazy tenant, and you’re unable to rent your apartment out again until the repairs are all complete.
Property Owners Liability (covers you individually for any negligence in apartment ownership)
Like Contents cover, Landlords insurance is the apartment owners responsibility so consider this cost when reviewing your ROI.
That makes 3 policies to consider!
So as you can see, unlike the usual home building / contents policy, owning an apartment is a little different when it comes to your Insurance needs. It’s always recommended that two out of the three policies should be taken out.
To simplify the process, we always recommend getting some good advice from a professional Insurance Broker that knows their way around Apartment covers. They will find you the best deal that meets your individual needs and when it comes claim time will represent and advocate for you, not the insurers, to ensure that your claim is paid to its fullest extent!
This article was prepared by Ryhs Pearce of MGIB