Individual Building Insurance for B-class (ACT)

No.  This is not being considered as a cost-saving measure.  If the costs are prohibitive as you suggest then we may lose interest.

I think it unlikely that an owner in this complex would not take out building insurance, but to guard against that, perhaps the owners corporation rules could be amended to mandate that.  The units are sufficently separated that fire contagion is no greater a risk than it would be for separate houses, particularly in modern developments with small blocks

This is being considered for a couple of reasons.  Ideally we’d all like to have our building and contents insurance with the same insurer, although our preliminary investigations suggest that could be difficult to do if the usual contents insurers don’t offer building insurance for individual units.  Perhaps they might if this approach were to become more common.

The main reason is that we’d like not to be exposed to the risk association with the other nine units.  We’d like to manage the risk of our own unit. That’s how B-class developments are supposed to operate. There have been a couple of very significant claims in this complex in recent years that have adversely affected our insurance premiums and the associated excesses.  We have sought to manage that risk by taking whole of complex maintenance activities under a special resolution, but this is difficult to do in a coordinated way.  Our view is that it would be easier to do on an individual unit basis, as the specific maintenance requirements vary from unit to unit.

We assume that the ACT Government made this change to the legislation in response to requests from owners coorporations in the ACT, and if so then it seems likely that the motivation was so that unit owners could managed their own risk.  The other possibility is that they were copying other jurisdictions.

In either case, someone must have some idea of how to make this work, which is my main question.

kaindub wrote:

Whilst the insurance companies you mention are well known in car z house insurance, they are by no means big in strata insurance. I know GIO only deals in very small complexes.

You also need to consider how workers insurance and public liability insurances will be effected. These sorts of insurances are quite expensive compared to building insurance.

And you may face increases in premiums if a claim is made against common property and another owner does not have insurance.

Kaindub – when you say that “GIO only deals in very small complexes”,  are you referring to strata building insurance, and not owners’ contents insurance?  I’m fairly sure that one member of our committee contacted GIO and was told that they didn’t do strata building insurance at all.  Is this incorrect?

As I tried to say at the outset, our existing strata insurance comprises a suite of ten policies. I’ve listed these policies below, minus the dollar values. If this was to work, we’d need to find an insurer who could offer all these policies, minus the building insurance element.  We’d also need to find an insurer who would insure each building on an individual basis.

I’m sure that a range of reasons could be given as to why there might be problems with this approach, but we won’t know whether these are genuine problems in practice without finding insurers who offer the policies we need, get prices and read their PDS.

So my questions remain as they were in my OP:

(i) Is the ACT unique in allowing this?
(ii) Does anyone know how to get it to work? Which insurance companies will insure the buildings of an individual unit in a B-class units plan?

There must have been a reason why the ACT Government made this change to the legislation.

Thanks

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CURRENT STRATA POLICIES

Policy 1 – Insured Property
Building:
Common Area Contents:
Loss of Rent & Temporary Accommodation:

Policy 2 – Liability to Others

Policy 3 – Voluntary Workers

Policy 4 – Workers Compensation

Policy 5 – Fidelity Guarantee

Policy 6 – Office Bearers’ Legal Liability

Policy 7 – Machinery Breakdown

Policy 8 – Catastrophe Insurance
Extended Cover – Loss of Rent & Temporary Accommodation:
Escalation in Cost of Temporary Accommodation:
Cost of Removal, Storage and Evacuation:

Policy 9 – Government Audit Costs and Legal Expenses
Government Audit Costs:
Appeal expenses – common property health & safety breaches:
Legal Defence Expenses:

Policy 10 – Lot owners’ fixtures and improvements (per lot)