Protection

Strata vs landlord insurance – which covers what?

When it comes to what insurance is needed to cover investment properties within strata complexes, it can get a little confusing. We unpack which policy covers what…

Around 4.2 million Australians live in strata properties, with roughly 47 per cent rented. Demand has grown in recent years due to the cost-of-living crisis and lifestyle changes, with apartments making up 42 per cent of property transactions in the year to August.

Apartments remain more affordable than houses (median unit values are $223,000 lower) but vacancies are tight, rents are rising, and unit prices are growing faster than houses. The median weekly capital city unit rent is $650, and rents are expected to grow 24 per cent over the next five years, with most two-bed apartments exceeding $700 per week by 2030. Around 39 per cent of buyers are now investing in strata properties.

With more investors entering the market, it is essential they understand insurance requirements to avoid underinsurance.

Insuring units

A strata property is a unit within a larger building or complex, like an apartment, townhouse, or villa. Shared areas are managed by the owners’ corporation (or body corporate), while owners are responsible for their own units.

Insurance for strata rentals can be more complex than for standalone homes. It is not always clear what counts as common property, who insures what, and what each policy covers.

In simple terms: The building itself is collectively owned and insured by the body corporate, not the landlord. Landlords are responsible only for their own unit.

Strata insurance

There are around 3.2 million strata lots in Australia, with an insured value of about $1.4 trillion.

Strata insurance is legally required across Australia. While rules vary by state, strata policies typically cover:

• The building structure, common property, and fixtures that form part of the building (e.g. balconies, windows, shared pipes, and underground services).

• Appliances, furniture, equipment, and artwork in common areas.

• Loss or damage from events like fire, storm, water, theft, or accidental/malicious damage.

• Legal liability if someone is injured on common property. NOTE: Injury in a common area = strata insurance. Injury inside the unit = landlord insurance. Coverage changes at the apartment door.

The body corporate is responsible for arranging strata insurance. Individual owners cannot take it out.

Landlord insurance

Do you need landlord insurance if you have strata insurance? Yes. Strata insurance only covers common property. Landlords need their own insurance to protect their unit and belongings, including:

• Contents of the unit, such as personal possessions, fittings, and fixtures

• Legal liability (protection when a landlord is legally liable for injuries/incidents. Claims can reach millions of dollars in compensation)

• Tenant-related losses, including damage or loss of rent

Insuring houses

For landlords of detached houses, insurance is usually more straightforward. The landlord owns the building and any outbuildings, so they need to insure the structure, including fixtures and fittings. They also need coverage for their own contents, legal liability, and tenant-related risks such as damage or loss of rent.

Tenant insurance

Whether renting a unit or a house, tenants need their own insurance to protect their personal belongings and cover their legal liability. Landlord insurance, whether for a strata property or a standalone house, does not cover the tenant’s possessions or liability.

Quick guide – what each type of insurance covers

Here is a coverage table of who is generally responsible for what when it comes to a strata unit. However, please note that this is a general list and cover can vary between policies, so it is important to check the details of each individual policy.

Cover for	Body corporate (through strata insurance)	Landlord/owner (through landlord insurance)	Tenant   (through tenant insurance)
Building structure/complex (e.g. exterior walls, wiring, water and sewerage pipes, balconies, ceilings, floors, windows, lifts, stairways)	✓	X	X
Shared/common areas (e.g. pools, tennis courts, gyms, communal laundries, lobby/foyer, communal BBQs, common entries and exits, car parks, gardens)	✓	X	X
Shared/common property (e.g. lobby carpet, foyer artwork, gym equipment, loungers by the pool)	✓	X	X
Permanent fixtures in each unit (e.g. doors, tiling, built-in ovens, stovetops, ducted air-conditioning, kitchen cupboards, baths, showers) Note: Check the strata policy as changes to the original building (e.g. a replacement kitchen or bathroom), may not be covered.	✓	X	X
Furniture, fittings (e.g. carpets, lino, blinds, curtains, light fittings, paint, wallpaper) and fixtures (e.g. appliances not wired in, washing machines, stoves, dishwashers or in-unit only air-conditioners, heaters) within unit owned by landlord	X	✓	X
Furniture, soft furnishings, appliances and personal possessions owned by the tenant	X	X	✓
Tenant relocation in the event the rental becomes uninhabitable (due to an insured event)	X	X	✓
Tenant-related issues including damage, loss of rent, or legal costs associated with taking action against the tenant	X	✓	X
Legal liability in common area/on common property	✓	X	X
Legal liability within the unit	X	✓	✓

As mentioned, the above is only a general guide. Property owners should review their strata management contract and the strata insurance policy to understand exactly what the body corporate covers and what is not included.

Strata, landlord and tenant insurance – how it works when something goes wrong

Here is a simple example of how the different types of insurance apply in a strata rental.

A storm hits and water enters a rented apartment through the roof, damaging the roof itself, the walls and ceilings, the carpets and blinds, and some of the tenant’s belongings.

• Body corporate: Claims for damage to the roof, walls, ceilings, and skirtings, which are part of the building and covered by strata insurance.
• Landlord: Claims for carpets and blinds, which belong to the owner and are covered under the landlord’s contents insurance.
• Tenant: Claims for personal belongings, which are not covered by strata or landlord insurance and require the tenant’s own contents policy.

Key takeaway: Three separate claims are required, one for each insurance type.

The right cover

While strata insurance can be confusing, it essentially involves three separate policies covering different areas: the body corporate for the building and common areas, the landlord for fixtures and fittings, and the tenant for personal possessions.

By knowing who is responsible for what in a strata complex, property investors can ensure their rental is properly protected.

EBM RentCover products:

• RentCover Ultra: Designed for strata units; covers contents, legal liability, and tenant-related risks.
• RentCover Platinum: Designed for detached houses; covers building, contents, and legal liability.

If you have any questions about landlord insurance for strata properties, please reach out to a member of our Expert Care team for guidance – 1800 661 662.

*While we have taken care to ensure the information above is true and correct at the time of publication, changes in circumstances and legislation after the displayed date may impact the accuracy of this article. If you need us we are here, contact 1800 661 662 if you have any questions.