Insurance

On the 30th August 2008 the Body Corporate and Community Management (Standard Module) Regulation 2008 commenced.

Those regulations have changed some of the insurance provisions relevant to standard module schemes. These notes are based on standard module schemes and if you are interested in the provisions of a different scheme module then the relevant module regulation should be checked.

Section 181 requires the body corporate to insure the building or buildings for their full replacement value. The body corporate is also required to obtain an independent valuation stating the full replacement value at least every 5 years. The cost of that valuation will be payable by each lot owner in proportion to the amount of the premium for reinstatement that is payable by that lot owner. Details of the value of the buildings and the date of the last valuation must be included as part of the information provided to owners in the notice of the annual general meeting or as a note attached to the proposed administrative fund budget.

In a standard format plan where buildings have common walls the body corporate must insure the buildings on behalf of owners. The premium for the building replacement cover is paid by owners in the proportion that the replacement value of their building represents of the total building valuation. In a building format plan the premium is divided in accordance with the interest lot entitlement.

Improvements made to a lot or the type of use to which a lot is put can impact on the valuation or the premium. As a result an owner may have to pay an additional premium.

The insurance of a stand alone building in a standard format plan is not automatically covered under a policy taken out by the body corporate. However, if the appropriate procedures are followed the owner can be part of a voluntary insurance scheme.

For insurance purposes the regulation provides that a building includes improvements and fixtures (but not including carpet). Other exclusions include:

• temporary wall, floor and ceiling coverings.
• items that can be removed by a lessee or tenant at the end of a lease or tenancy.
• mobile or fixed air conditioners servicing a particular lot.
• curtains, blinds or other internal window coverings.
• mobile dishwashers, clothes dryers or other electrical or gas appliances not wired or plumbed in.