Residential Strata Insurance: 6 Common Claims and how to avoid them

Date Published: 21 January 2021, updated 16 September 2024

From storms, floods, break-ins and legal disputes, we’ve settled thousands of claims over the years - and we’ve also seen how some of them might have been avoided.

Here are the most common Residential Strata insurance claims we see every day, and some tips on how you can help to avoid them in your building.

Leaks and water damage

From CHU’s internal data, just over 50% of residential strata claims^ lodged are the result of water damage. Whether it’s a burst pipe, overflowing water or even roof damage - if it’s not managed in time, it could lead to a large claim.

Gradual deterioration and/or Wear & Tear should be rectified by maintenance. The source of leaks can be hard to detect, so getting some help to do so can be valuable. Modern technology enables pipe location/leak detection with minimal exploratory destruction.

CHU has access to Drones and Lidar technology that can identify damage to roof areas safely.

How to avoid:

Here are some steps to help prevent water leaks and damage in your strata property:

• Check the warranty expiry date on the collar of flexi hoses and that they are intact on all personal and communal appliances which are plumbed in, like washing machine, dishwasher and water filter
• Clean and maintain roof and gutters and look for for damaged tiles, obstructions or blockages
• Investigate any reports of water pressure changing or an increase in water charges, there could be a leak behind the walls or with the garden reticulation
• Inspect walls and ceilings for blistering, water marks or stains
• Don’t walk away when filling the bath or sink
• Turn off the water when leaving your residence for a longer period of time

Storms, floods and weather events

Although Australia is famous for its great weather - we know that it can actually be very turbulent, and sometimes extreme. From CHU’s internal data, natural events including storms make up for around 25% ^ of residential claims each year.

How to avoid:
Make sure your building is storm-ready by:

• Keeping contents and appliances out of areas that are at risk of flooding
• Clearing gutters and balconies regularly, so rainwater can drain
• Trim back trees and branches
• Secure loose items such as chairs, bins, and outdoor items during storm warnings to prevent them from becoming hazardous projectiles
• Prepare your residents for storms, by informing them of what to do when there’s a storm approaching  
• Tune into local weather reports and check in on your neighbours and tenants that they are safe and prepared

Accidental damage

Accidental damage claims can be some of the most frustrating, because they often could have been easily avoided.

How to avoid:

• Ensure communal areas are kept well maintained, clean and tidy, and that common traffic areas are clear of obstructions to prevent an incident
• Check before you dig in the garden to prevent damage and disruption to reticulation or infrastructure networks (Dial before you dig www.1100.com.au)
• Use professional tradespersons for maintenance and/or installations
• Educate residents about proper care and use of common areas and facilities

Legal liability

Not the most common claim, but Legal Liability can be the most expensive. It covers you when you’re legally responsible to pay compensation if an incident has occurred.

This could include covering the legal and indemnity costs for:

• Accidental damage to someone's personal property in common areas - including tradespersons
• Injury or death caused by negligence, and any loss of earnings due to injury
• Wrongful acts by an Office Bearer (e.g. the Chairperson, Secretary or Treasurer of the committee) for a breach of duty or clerical mistake

How to avoid:

• Keep an eye out for any potential safety hazards, take all reasonable action to minimise a risk as soon as possible and report any potential concerns to the Body Corporate
• Encourage residents to promptly report issues  and safety concerns to the Body Corporate or Strata Manager
• Keep a record of any potential hazards and actions taken to mitigate these risks. This can provide valuable evidence in the case of a legal dispute
• Establish clear procedures for managing risks, including emergency response plans and clear signage in common areas
• Ensure that all Office Bearers are aware of their duties and responsibilities so that they can perform their roles effectively

Fire damage

If a fire starts in your building it can spread fast and the damage can quickly become a total loss. 

As well as having fire safety equipment fitted, get your appliances serviced regularly and act quickly if someone reports an issue with wiring or power outlets.  Consider installing an RCD (residual current device) for additional protection that ordinary fuses and circuit-breakers cannot provide.

Here are some of the most common sources of residential fires to be aware of:

• Faulty wiring or old appliances causing electrical/mechanical fires, such as air conditioning units or dryers
• Lint filters on washing machines and dryers that are not cleaned
• Kitchen fires caused by fryers, overheating pans and hotplates
• Candles and incense burners left unattended
• Cigarette related fires - indoors and on terraces and balconies

How  to avoid:

• Conduct regular maintenance and inspections to ensure all electrical systems including fire alarms are working properly
• Regularly clean out lint filters in dryers
• Install and maintain fire safety equipment such as smoke detectors, sprinklers, and alarms
• Establish a fire safety protocol such as regular fire drills and emergency evacuation plans
• Encourage residents to never leave cooking unattended, extinguish naked flames like candles before leaving a room, and educate them on the safe storage of flammable items
• Equip common areas and units with fire extinguishers and fire blankets with clear instructions on how to use them in the event of a fire

Theft, vandalism and malicious damage

Items in the common areas like BBQs, gardening tools and gym equipment may be an attractive target for burglars. Often it can be easier to gain access to these areas than resident’s homes, and they can blend in around the building under the guise of a tradesperson or new resident.

As well as replacing any stolen items, you might also have to claim for broken windows and doors or new locks if the intruders have forced their way into the building. So sometimes a small break-in could result in a much larger insurance claim.

How to avoid:
Here’s a few easy actions you and your residents can take to help prevent a break-in or theft in the building:

• Introduce yourself - get familiar with your neighbours and tenants so you’ll recognise anyone out of place
• Don’t be afraid to question unfamiliar people entering the property
• Consider adding smart locks to shared areas like garages, terraces and gyms
• Don’t leave doors propped open - especially during deliveries or removals
• Wait for the shared garage door to be closed before exiting the driveway
• Increase your security by adding intercoms, motion lights or security cameras - although pricey it is a good investment

Find out more about CHU Residential Strata Insurance Plan

Strategies for reducing claims in Strata Properties Through Effective Risk Management

Mitigating the risks in your strata property decreases the likelihood of urgent repairs and the need to file claims. By regularly inspecting your building and maintaining ongoing upkeep, you can significantly reduce the risk of potential issues. 

1. Regular inspections

Conducting regular building inspections helps identify and address any issues before they escalate into costly problems. Many strata claims stem from poor maintenance and known maintenance defects. Furthermore, an ongoing lack of maintenance can lead to multiple claims, increasing the risk profile of your property. Demonstrating proactive maintenance practices, such as scheduling routine checks, addressing issues promptly, and maintaining up-to-date records, is essential in minimising risks.

2. Upgrading/installing security systems

Upgrading safety systems enhances the security and safety of your property and residents. A modernised security system deters vandals and intruders, while updated fire alarms and sprinkler systems help mitigate fire risks, offering comprehensive protection for your strata property.

3. Ensuring compliance with building codes

Compliance with current building codes mitigates risks by reducing the likelihood of building defects and accidents that could lead to costly claims. Staying up-to-date with local building regulations and ensuring your strata property meets all requirements is crucial. Periodically review your building’s safety and maintenance standards to avoid potential issues.

4. Reducing Water Damage Risks

Water damage is one of the most common and costly issues in strata properties. To minimise the risk, consider implementing preventative measures such as regular plumbing inspections, roof maintenance, and gutter cleaning. Ensure that all common areas have adequate drainage systems to handle heavy rainfall. Additionally, encourage residents to report leaks or water-related issues promptly so they can be addressed before they escalate.

5. Utilising Smart Technologies

Incorporating smart technologies into your strata property can significantly enhance security and prevent potential issues. For instance, installing water leak detectors can help you detect leaks early and avoid costly water damage. Smart locks offer enhanced security by allowing you to control access remotely, while smart thermostats can optimise energy usage and prevent overheating. Smart garage doors provide additional safety and convenience by allowing you to monitor and control access. Embracing these technologies not only protects your property but also improves the overall living experience for residents.

We know that there’s always going to be some unavoidable accidents or damage, especially in a shared property. But because we’re experts in residential strata insurance, we can help to tailor your policy, so you’re confident that you have the right cover for your building. 

More information >

Enhance Your Strata Property’s Safety to Minimise Risk

Implementing effective risk management strategies is crucial for maintaining the safety of your strata property and its residents, as well as reducing the potential of claims. Each state and territory mandates that strata title properties hold strata insurance, which provides essential coverage for common areas against accidental damage, including that caused by natural disasters like bushfires and floods. Additionally, residential strata insurance often includes liability coverage for personal injury, offering further protection for your property and its occupants.

Explore our residential strata insurance plan to safeguard your property from common claims.

^ Estimate based on CHU Assess claims

CHU Underwriting Agencies Pty Ltd (ABN 18 001 580 070, AFS Licence No: 243261) acts under a binding authority as agent of the insurer QBE Insurance (Australia) Limited (ABN 78 003 191 035, AFS Licence No: 239545). Terms, conditions, limits and exclusions apply to the products referred to above. Any advice in this article is general advice only and has been prepared without taking into account your objectives, financial situation or needs. Before making a decision to acquire any product(s) or to continue to hold any product we recommend that you consider whether it is appropriate for your circumstances and read the relevant Product Disclosure Statement which can be viewed on this website or obtained by contacting CHU directly.