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Who is responsible for building insurance?

By Frank Higginson01 Apr 2009

We are often asked who is responsible for insuring the building in a community titles scheme. Who is responsible will depend on two factors:

  1. whether the plan which established the scheme is a building format plan (formally a BUP) or a standard format plan (formerly a GTP); and
  2. whether any buildings share common walls.

Generally speaking:

  • a building format plan is a plan where the majority of lots in the scheme share walls and roofs, such as a high rise complex; and a standard format plan is a plan where none or only a few of the buildings in the scheme share walls, such as a traditional townhouse complex.

If the scheme is created by a building format plan the body corporate is responsible for obtaining building insurance. The lot owners must pay a share of the costs of insurance in accordance with the interest lot schedule for the scheme.

If the scheme is created by a standard format plan:

  • for a lot where the building erected on the lot shares a common wall/s with a building erected on an adjoining lot – the body corporate is responsible for obtaining insurance for these particular lots only and the lot owners must pay for the cost of insurance in accordance with the respective values of the building erected on each lot; or
  • for a lot where the building erected on the lot does not share any common walls – the lot owners are responsible for obtaining the insurance. The body corporate is not obliged to obtain insurance but has the power to do so if the body corporate committee resolves to establish a voluntary insurance scheme. Then the individual lot owners have an option whether to participate in the insurance scheme. Again, the owners who participate must pay for the cost of insurance in accordance with the respective values of the building erected on each lot.

All insurances must be obtained for the full replacement value of the buildings. Of course, the obligation to obtain building insurance is in addition to the requirement to obtain insurance for common property, body corporate assets and public liability insurance.

To determine who is responsible for the building insurance and how the costs will be shared between the lot owners the relevant plan must be examined and regard must be had to the provisions contained in the applicable regulation module. If in doubt, we are always happy to provide advice.