For developers, strata insurance planning involves considering how a completed project will move from construction-focused insurance to cover for the operating strata or community title scheme.
Starting early gives you time to prepare the building information insurers may request. This can include construction type, materials, fire protection, shared facilities, intended occupancy, commercial lot use and the proposed building sum insured.
Insurance needs may change as a project reaches practical completion, title registration, settlement and operational handover. Construction insurance and operational strata insurance are designed for different stages, so the timing and responsibilities should be reviewed before construction cover ends. Construction-focused and operational strata insurance can apply at different stages, so developers should review the timing, responsibilities and available cover before handover.
For mixed-use projects, classification may depend on the commercial floor area and how those lots will be used. Depending on the insurer and product, developments with 20% or more commercial floor space may need commercial strata insurance.
At handover, keep clear records of cladding and other external wall materials, including available specifications, engineering reports and information about any rectification or fire orders.
Different development structures create different insurance needs. The completed property, shared facilities, ownership model and intended occupancy can all affect how the risk is presented to insurers.
Insurance planning for residential developments that are retained and leased, with consideration for the building, shared facilities and ongoing operations.
Insurance for registered community property and shared facilities, based on how common areas, individual lots and responsibilities are structured.
Operational cover for completed residential strata buildings and common property, subject to the policy terms, conditions and exclusions.
Insurance for commercial or mixed-use strata where tenant activities, fire protection, construction and commercial floor space may affect underwriting.
Registered plans, building management statements and community title documents can affect which assets form part of the insured building and which remain the responsibility of individual lot owners.
Clear handover records can help the owners corporation, community association, strata manager and insurer understand shared roads, services, plant, recreational facilities, warranties, maintenance information and building boundaries.
Governance arrangements may also change after handover as control moves from developer-appointed representatives to owner-elected committees. Clear records of contracts, decisions and responsibilities can support that transition.
Marsh can help developers and project stakeholders plan insurance information, insurer engagement and the move into ongoing strata cover.
Developers may need to consider the transition from construction insurance to operational strata cover, building materials, fire protection, occupancy, shared assets, valuations and the responsibilities of the future scheme.
Planning should begin before practical completion and handover. This allows time to prepare building information, consider insurer requirements and review when construction-focused insurance may end.
Construction insurance is designed for the project phase. Operational strata insurance is generally arranged for the completed building, common property and selected liabilities, subject to the policy wording.
They may be. Insurers can consider the percentage of commercial floor space, tenant activities, fire protection, equipment, construction materials and how shared areas are used.
Marsh can support insurance planning for build-to-rent, community association, residential, commercial and mixed-use developments, subject to the project and available insurance markets.
Insurers may request construction details, building materials, cladding information, fire protection, intended occupancy, commercial tenant activities, shared facilities, valuations and known defects or orders.
Keep available product specifications, builder or supplier records, engineering reports, audit results and information about any rectification or fire orders. Insurer and legal requirements may vary.
Operational strata policies often limit or exclude the cost of correcting faulty design, materials, workmanship and inherent, latent or structural defects. Separate latent defects insurance may be considered.
A broker can help identify the information insurers may need about common property, shared services, recreational facilities, building boundaries and separate insurance responsibilities.
This website contains general information, does not take into account your individual objectives, financial situation or needs and may not suit your personal circumstances.
Marsh Pty Ltd (ABN 86 004 651 512, AFSL 238 983) (“Marsh”) and Marsh Advantage Insurance Pty Ltd (ABN 31 081 358 303, AFSL 238 369) (“MAI”) arrange the general insurance (i.e. not the Discretionary Trust Arrangement) and are not the insurer.
Discretionary Trust Arrangements are issued by the Trustee, JLT Group Services Pty Ltd (ABN 26 004 485 214, AFSL 417 964) (“JGS”). Any advice or dealing in relation to a Discretionary Trust Arrangement is provided by JLT Risk Solutions Pty Ltd (ABN 69 009 098 864, AFSL 226 827) (“JLT”). The cover provided by a Discretionary Trust Arrangement is subject to the Trustee’s discretion and/or the relevant policy terms, conditions and exclusions.
For full details of the terms, conditions and limitations of the covers and before making any decision about whether to acquire a product, refer to the specific policy wordings and/or Product Disclosure Statements (PDSs) available from the relevant product issuer. Target Market Determinations (TMDs) are available here.
Marsh, MAI, JGS and JLT are all businesses of the Marsh group.
LCPA 26/ 3513
