If your building is insured for less than its replacement value, there may be a shortfall in your claim after a major loss. If this eventuated, this would leave lot owners responsible for covering the shortfall. Ensure valuations are a regular agenda item at your building’s AGM to reduce the risk of underinsurance.

A professional strata building valuation is the most common way to determine the appropriate sum insured.

The valuation should cover:

CHU automatically indexes your sum insured at renewal, but valuations should be carried out regularly. In some states, valuations are legally required every five years.

It covers legal costs if claims are made against members of the strata committee. Protection applies to wrongful acts, errors, or omissions committed while carrying out official duties.

They are permanent improvements installed by a lot owner for their exclusive use. Examples include upgraded floorboards, renovated bathrooms or built-in cabinetry. These become part of the building once installed.

No. Strata policies cannot be cancelled mid-term by individual lot owners. Strata insurance is held by the Owners Corporation, not individual owners. If an owner has sold their unit they are no longer party to the strata policy. Any adjustments such as levy contributions would be typically managed by your conveyancer through the property settlement process.

Common area contents are items owned by the Owners Corporation that are located in shared spaces.

Examples include:

Permanent fixtures like driveways and letterboxes are covered under the building sum insured, not contents.

Fidelity Guarantee is cover for the Body Corporate in the event your funds are misappropriated during the period of insurance. Whilst only required by legislation in South Australia, Fidelity Guarantee forms part of CHU’s specialised cover and is standard on all Residential Strata policies.

No. Strata insurance does not cover defects, wear and tear, or poor maintenance.

It is designed to cover sudden and unexpected damage (e.g. fire, storm or water damage), not ongoing maintenance or construction issues.

Strata insurance is arranged by the Owners Corporation (body corporate), not individual owners.

The policy covers the whole building and shared property on behalf of the group

Strata insurance covers common property and shared areas in strata-titled properties, while home insurance covers individual units or houses. Strata insurance also typically includes liability protection for the body corporate and its members.

Apartment ownership is on the rise, it is often a great entry point for first home buyers as well as first time property investors. One consideration new owners and investors need to consider is building defects. Whether it is a new build, or you are purchasing into an existing building, defects can arise, and it’s crucial to be aware of them and address them as soon as possible to prevent long-term damage and avoid costly repercussions.

The following article outlines some of the common defects found in apartment complexes. It is important for owners to be aware of what to look out for, and the questions to ask to ensure they have all the details to make informed decisions.

1. Building Fabric

Common defects in the building fabric include efflorescence, peeling paint, and minor settlement cracking. While these may not be immediate causes for concern, if left unattended, they can lead to more significant issues.

2. Cladding

Non-compliant lightweight cladding, such as aluminium composite panels or ACP and EPS, is a common issue in strata buildings. This type of cladding can cause a greater potential for fire to spread quickly in a building.

3. Waterproofing

Waterproofing issues can also cause significant problems, such as leakage from roofs, mould, blistering paint, rising damp, and cracked walls. If left unattended continued water penetration into concrete structures such as balconies can lead to concrete cancer, which rusts the steel within the concrete.

4. Plumbing

Plumbing and drainage issues such as blocked drains, leaking pipes, and sewage backups, can cause significant damage to the building’s structure and pose health risks to residents.

5. Electrical

Electrical issues, such as faulty wiring, can lead to power outages, electrical shocks, and fires, all of which can cause significant damage to the building’s structure and endanger residents.

6. Roof Coverings

Defective roof coverings, caused by poor installation, inadequate materials, or poor maintenance, can lead to water leaks and structural damage, ultimately affecting the building’s value and insurability.

Defects can impact Strata insurance policies, which are designed to cover property damage and liability claims. Most insurance policies exclude cover for buildings with defects within the property damage section of the policy however, exposure to claims under the liability section of the policy remains a concern. Note, that in many cases your building can still be insured with defects, as long as you have fully disclosed the information and taken actions to remediate the defect, the insurer will take into account the age of the building and location among other factors and assess the risk of insuring the building. Defects may result in higher premium or excess to cover the building, and some insurers may in fact deem the building to be too risky to provide the cover.

Building defects can cause significant risks and should be addressed as soon as they are discovered.

At CHU, we recommend utilising reputable builders and developers to reduce the risk of defects, and it is crucial to ensure proper maintenance and remediation should defects be discovered post purchase, or midway through a policy cover.

Defects will impact a building’s value and insurability; it is essential to take action to address defects and maintain the safety and value of your property.

CHU Services has recently launched a new AI powered inspection service, CHU Inspect, which can assist owners, strata managers and brokers to identify defects, and monitor the overall building health. Contact us to learn more about CHU’s latest services.


The Federal Government estimates that every year, more than 4500 fires across Australia are caused by cigarettes. One of the biggest causes of fire in apartments and other residential homes is cigarettes which have not been extinguished properly.

Fires in apartments can have a devastating effect on the whole apartment block. Apartment fires have the potential to spread heat, smoke and fire throughout the building very quickly, not only causing considerable damage but also putting the lives of residents at risk.

Some fires in apartments have been caused by a smoker on a balcony leaving it smoldering on an outside table on their deck. Or they flick it off their balcony and it lands on a balcony below, setting fire to items on the other occupant’s deck.

Increasing threat

Another increasing fire threat is overheating lithium batteries (officially known as lithium-ion batteries).

The greater use of these batteries has seen fires correspondingly increase. They are contained in everything from large-scale solar energy storage systems to hybrid and electric vehicles, and smaller scale devices like laptops. Most portable electronic devices use single lithium cells, such as cell phones, smart-watches and e-cigarettes. They are also now used extensively for higher-powered portable applications like power tools, remote-controlled vehicles, lawn mowers, bikes and scooters and even in children’s toys

Emergency Services departments warn that with the use of lithium batteries expected to increase over the next few years, this could result in a surge of preventable blazes.

Lithium batteries are extremely sensitive to high temperatures and highly flammable. They tend to degrade quickly due to heat. If a lithium battery pack fails, it will burst into flames and can cause widespread damage. Fires mainly start during charging.

Once lithium battery fires take hold, they are notoriously difficult to put out.

Apartment residents should be careful to keep them away from flammable material and ensure they use charging systems specifically manufactured for your product rather than less costly, unbranded versions.

Lithium batteries should not be left on a permanent charge— even overnight can trigger overheating. When the device is charged, it should be unplugged.

Be prepared

Strata communities can do a lot to minimise fire risks in their buildings.

Regular fire safety checks should be at the very top of the strata committee’s list. As strata property’s mandatory fire safety requirements will differ a little from state to state, each property’s strata committee should be aware of their local requirements.

Fire safety equipment, such as fire extinguishers, sprinklers and smoke alarms, should be serviced and maintained regularly to ensure they are in good working order and fire doors needed to be clear of any obstructions.

 If there is a fire, it’s important the apartments have an evacuation plan, and all occupants are aware of it.

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