Strata titles are only getting harder to insure, despite rising demand across the ACT. Photo: Michelle Kroll.
About one in five Canberrans lives in a strata community.
That’s more than 160,000 residents paying levies towards safe, functional buildings, but a troubling trend has strata in hot water with insurance providers.
Ever waited months to have a dodgy elevator fixed or peeling lobby repainted? You’re not alone; maintenance delays are common.
Executive committees and strata managers should ideally handle defects, repairs and scheduled services on time, every time.
So, why don’t they?
According to allinsure partner Lara Morgan, many committees simply aren’t aware how to plan maintenance effectively and react to issues as they arise, rather than being proactive.
“Canberra doesn’t have compulsory training for executive committees yet, though it is currently under review,” she says.
“Strata managers are in short supply and widely time poor, so it can take a while for them to respond.
“Inflation is also driving up prices for just about every resource needed to keep buildings compliant. Storms, floods, drought and bushfires are all becoming more common, which will naturally see prices rise as well.”
Lara says the question unfortunately isn’t whether stratas can afford to conduct maintenance, it’s whether they can afford not to.
The longer repairs take, the more risk flows onto the insurer. So buildings with major or repetitive issues face dire consequences.
In short, many strata communities are paying through the nose to stay covered. That’s if they stay insured at all, because some providers are choosing to come off risk altogether.
“Increased premiums and excesses, limited policies and shorter coverage terms are all common penalties,” Lara says.
“But in the worst-case scenario, providers can and do refuse to renew coverage. Stratas can then find themselves in breach of ACT legislation for failing to meet their insurance requirements.
“Premiums are already high and it’s residents who will eventually front the cost, because when insurance goes up, their levies will too.”
Cracks, leaks, mould, outdated electrics, faulty waterproofing, plumbing and drainage issues, and non-compliant materials are the most common defects found in strata buildings.
Whether they’re caused by poor construction, weather damage or general wear and tear, they can all massively affect insurance costs.
Lara Morgan recommends using a local broker with a proven track record in strata insurance. Photo: Daniella Jukic.
A few ways to secure lower premiums and better policy terms exist. Above all, executive committees need to see maintenance as a top priority.
“Maintenance plans should be reviewed and actioned regularly. Prevention is better than a cure,” Lara says.
“It’s also essential to partner with a local advocate who understands Canberra’s environment and has experience in strata.”
She says a strata complex in north Canberra recently contacted allinsure for help when an interstate broker was unable to reduce its “ridiculous” premiums. Another reached out when it simply couldn’t secure cover alone.
In both cases, allinsure brokers were able to visit the strata site, understand the committee’s plan to address current issues, and produce a detailed report for the insurer to review.
The first complex’s premiums were reduced by 25 per cent, the second was finally able to secure coverage.
An inquiry into the management of strata-titled properties is currently underway in the ACT.
The Legislative Assembly will focus its review on the roles of strata managers and executive committees, how the Unit Titles (Management) Act 2011 is applied, the potential for an ACT strata commissioner, and more.
“Demand for medium- to high-density living is still growing; new developments are announced what seems like every week,” Lara says.
“Every one of these buildings needs insurance, but unless committees take a more proactive approach, it’s only going to get harder to find fair policies.
“Hopefully, this review will give the strata industry the resources it needs to improve processes for everyone.”
For more information visit allinsure.
