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Understanding the distinction between insurance and maintenance is essential to protecting your investment, and preserving its long-term value. A proactive approach to both insurance and maintenance helps protect your property, reduce unexpected costs and optimise market value.
Strata insurance is not a maintenance plan
Strata insurance and preventative maintenance both protect your property, but they perform very different roles.
Insurance is designed to respond when sudden or unexpected damage occurs from an insured event, such as a fire, storm or escape of water. It is not intended to pay for deterioration, defects, wear and tear or damage caused by inadequate maintenance.
Understanding this distinction can help your body corporate avoid declined claims, unexpected repair costs and preventable damage.
What does strata insurance cover?
Typically, bodies corprorate are legally required to maintain a policy that covers all buildings and improvements on the site, including all units and the common property, for damage. They’re also required to insure the body corporate for public liability with respect to the common property.
Strata insurance provides a competitive and comprehensive means of meeting these obligations. Good strata insurance policies cover the units, fences, sheds and other improvements as well as the common property for damage.
Damage is defined by each insurer and varies from policy to policy, but in essence it means sudden, accidental and/or unforeseen damage such as fire, storm, water damage from burst pipes, impact damage and so on. To understand what you’re covered for, it’s important to read your own Product Disclosure Statement (PDS).
Strata insurance is not intended to cover damage that occurs due to poor maintenance or defects, or damage that has happened over a long period of time. Again, it’s important to read your PDS to learn what is excluded and for what you are responsible for.
Why maintenace matters
Maintenance issues won’t improve with time. A blocked gutter, deteriorated seal, loose roof sheet or minor leak can develop into significant damage that could affect several units.
Apart from the inconvenience and distress caused to residents, poor maintenance may result in:
- repair costs that are not covered by insurance
- higher premiums and excesses
- denied claims
- difficulty obtaining alternate insurance quotes
- unexpected special levies for major repairs
- deterioration in the appearance of your property reducing the market value of it.
Insurance is not a substitute for maintenance. Proactive and regular maintenance is essential for optimising the value of your property and your investment.
Prevention costs less than repair
Preventative maintenance is a cost-effective way of allowing a body corporate to identify and address risks before they become emergencies.
Regular inspections and a properly prepared long-term maintenance forecast help the body corporate understand:
- what work is immedately required to prevent damage
- what work will be required in the future
- when that work is likely to be required
- how much it is expected to cost
- how much to budget for each year for the sinking fund.
A coordinated approach
Strata management, maintenance and insurance should not operate independently.
Building inspections can identify risks that may affect insurance. A capital maintenance forecast allows the body corporate to budget for work before deterioration results in damage. Claims histories identify trends that
Terrace combines strata management, insurance expertise and long-term maintenance planning. This enables us to identify risks early, assist bodies corporate to make informed decisions and advocate for clients when an insured event does occur.
Our Capital Maintenance Program converts a 15-year forecast into a practical schedule of inspections, budgets and works. It helps bodies corporate protect their buildings, control costs and reduce avoidable insurance claims.
protect your property
Good insurance provides essential financial protection. Good maintenance reduces the likelihood that you will need to rely on it.
Contact Terrace Strata Management to discuss your insurance arrangements or find out how our Capital Maintenance Program can help protect the safety, integrity and long-term value of your strata property.
