Industry

Insurance in Community Titles Schemes

The after-affects of the devastating January floods in central and south east Queensland and Cyclone Yasi in the north are still being felt in some community titles schemes.

Of major concern to those schemes where the body corporate is responsible for insuring the building, is making sure appropriate cover is in place. While issues of insurance costs are beyond the scope of the BCCM Office, we can provide information about the insurance requirements set out in the BCCM Act. The following is general information and the legislation should be consulted as the primary reference.

The Body Corporate and Community Management Act and its regulations provide that if one or more lots in a community titles scheme are created under either a building format plan or a volumetric format plan, the body corporate must insure each building for full replacement value. A building format plan of subdivision is a form of subdivision that normally occurs within a building. An example of a scheme established as a building format plan is a multi-level block of residential units.

The body corporate for a community titles scheme created under a standard format plan, where a building on a lot has a common wall with a building on an adjoining lot, must also insure each building for its full replacement value. An example of a scheme established as a standard format plan includes a townhouse complex where each lot includes a building and a backyard or courtyard.

The insurance policy must cover damage and the costs associated with the reinstatement or replacement of insured buildings. These costs must include the cost of taking away debris and the fees of architects and other professional advisers and also provide for the reinstatement of property to its condition when new.

The obligation on the body corporate to have adequate insurance is reinforced by the legislation which provides that at every annual general meeting, the body corporate must consider a motion to review each policy of insurance held by the body corporate. The notice of the annual general meeting or a note attached to the administrative fund budget being proposed, must include specific details about each policy of insurance including the name of the insurer, the amount of cover and a summary of the type of cover.

Importantly, the notice, or the note, must also include details of the full replacement value for the buildings as stated in the most recent valuation and the date of the valuation. To ensure this, the legislation requires the body corporate to obtain an independent valuation, at least every five years, stating the full replacement value of the building or buildings covered under the insurance policy.

The Financial Ombudsman Service may be able to assist in relation to issues with insurers. You can contact the ombudsman on 1300 780 808, visit www.fos.org.au or email [email protected].

Robert Walker
BCCM

Related Articles

0 0 votes
Article Rating
Subscribe
Notify of
guest
0 Comments
Inline Feedbacks
View all comments
Back to top button
WP Tumblr Auto Publish Powered By : XYZScripts.com
AccomNews
0
Would love your thoughts, please comment.x
()
x