Body Corporate Insurance – taking the stress out of taking charge
If you own an apartment or other strata title arrangement, you’ve no doubt come across the often mysterious yet powerful body corporate. But who are they? What do they do? And do you want to get involved?
Let’s first look at what the body corporate is.
Put simply, the body corporate (also known as an owners’ corporation or strata corporation) is the ‘owner’ of all the common areas and shared facilities in a multi-unit complex. The body corporate is run by a committee elected by and from the individual owners within the property.
So, what does it do?
In effect, the body corporate has two functions: management and policy-making.
Through the elected committee, it is responsible for the maintenance, safety and management of things such as lobbies and hallways, carparks, gardens, driveways, stairwells and lifts, external lighting and security, letterboxes, shared laundries and barbecues, and even staff such as building managers, cleaners and concierges.
That’s a lot of authority. And with authority comes responsibility, so, while it’s certainly extensive, the power of the body corporate is not limitless. All decisions and by-laws must be properly voted on, and comply with relevant state law (for example, they can’t override an individual person’s legal rights). Furthermore, all legal responsibilities must be observed, and no matter how well managed a body corporate is, accidents and mistakes can sometimes happen. So there is a legal requirement to hold strata body corporate insurance that covers the committee members.
You’ve probably also noticed that the body corporate makes policies, rules and by-laws, and although these must be voted on and accepted at a general meeting open to all owners, they are legally binding on every owner and resident. By-laws often cover things such as the use of balconies and common areas, what can be stored where, the times when residents can move furniture in and out, what pets can be kept, who you can rent to, and even when someone can use their own washing machine.
To pay for all of this, it charges owners an annual fee, and in some cases also levies a sinking fund for future capital upkeep.
You might be tempted then, to ask, why would I get involved?
Those who sit on the committee are generally owners who want to get things done, and want some level of input in the day-to-day running and long-term management of the property that they’ve invested in, so it’s certainly worth considering.
However, with all the responsibility involved, you might wonder whether the stress and worry would outweigh the benefits. Well fortunately, that’s where body corporate insurance comes in.
Each state has different laws, but specialist strata insurance companies such as Flex Insurance, are on top of the differences and can offer comprehensive body corporate cover that includes liability for committee members and officers. It recognises that legal claims can arise against even the most meticulous body corporate, and therefore covers legitimate management decisions and/or unforeseeable events.
In effect, it allows apartment owners to enjoy greater control and enjoyment of their valuable asset, without lying awake at night worrying about legal expenses. What’s more, insurers such as Flex let you sign up to a policy directly, thus providing cost savings for your body corporate – and in turn, you as an owner.
So, if you want to have a say in how your property is managed, the kinds of by-laws that are proposed and the fees that you have to pay each year, then yes, putting your hand up to sit on the management committee can be a very wise move – just make sure it’s adequately covered by insurance.