77 Effect of use of lot on insurance premiums
If the use to which a lot is put causes an insurance premium for the strata scheme to be greater than it would be if it were not put to that use, so much of a contribution payable by the owner of the lot as is attributable to insurance premiums may, with the consent of the owner, be increased to reflect the extra amount of premium.
Note. An owners corporation may apply for an order under section 149 (2) for a variation of contributions if an owner unreasonably refuses consent under this subsection.
s77 seems to be about a change in use of a lot; for example changing from a dress shop to a dry cleaner is the example found in Ilkins' text.
s77 requires the consent of those who have caused the premium increase but s149(2) is helpful if the owner refuses.
Contributions are levied based on unit entitlement even if it is a full commercial policy and yours is a residential lot.
Do you know what the difference in contribution would be? i.e. have you got an estimate from an insurer for the residential part that shows the residents are seemingly paying extra under a commercial policy.
You could ask the current insurer to specify how much of the current policy cost is attributable to the residential part of the SP.
Can you find an insurer who will give you a quote that has a residential component and a commercial component so you can get a feel for how the full commercial policy differs from a combined residential/commercial policy?
You may be able to get an order to more fairly distribute the insurance cost if it can be shown the residents are paying “extra” to cover a policy that is more specific to the commercial interests if you can show the residents are carrying the commercial interests insurance costs to some degree.
Shop around and see what other insurers are prepared to offer you and discover if you are paying too much because it is a commercial policy. If you find an offer for a policy that better suits the residential interests of the SP then you can take motions to an AGM to change insurers.
If you can get a policy quote with the two components (residential and commercial) then you have a good case for the residents pay the residential part and the commercial pay the commercial part – that would seems fair. 