Part 4Introductory note. This Part requires an owners corporation for a strata scheme for a building to take out insurance on the building. In the case of a strata scheme for a part of a building, the obligation to insure is placed on the owners corporation and the owner or owners of the rest of the building.The Part provides specific exceptions to the insurance requirements and enables an owners corporation to apply to an Adjudicator for an exemption from those requirements.
The Part also deals with other types of insurance that must or may be taken out by an owners corporation and contains miscellaneous provisions as to the taking out of insurance by an owners corporation or an owner of a lot.
In this Part, building includes:(a) owners’ improvements and owners’ fixtures forming part of the building other than paint, wallpaper and temporary wall, floor and ceiling coverings, and(b) a building consisting entirely of common property, and(c) anything prescribed by the regulations as forming part of a building for the purposes of this definition,but does not include:(d) fixtures removable by a lessee or sublessee at the expiration of a tenancy, or(e) anything prescribed by the regulations as not forming part of a building for the purposes of this definition.
(1) In this Part, a damage policy for a building means a contract of insurance providing for the matters referred to in this section in the event of the building being destroyed or damaged by fire, lightning, explosion or any other occurrence specified in the policy.(2) A damage policy is to provide for the rebuilding of the building or its replacement by a similar building in the event of its destruction so that every part of the rebuilt building or the replacement building is in a condition no worse or no less extensive than that part or its condition when that part was new.(3) A damage policy is to provide for the repair of damage to, or the restoration of the damaged portion of, the building in the event of its being damaged but not destroyed, so that the repaired or restored portion, is in a condition no worse or no less extensive than that portion or its condition when that portion was new.(4) A damage policy is to provide for the payment of expenses incurred in the removal of debris.(5) A damage policy is to provide for the remuneration of architects and other persons whose services are necessary as an incident to the rebuilding, replacement, repair or restoration.(6) A damage policy may provide that, instead of the work and the payments being carried out or made on the occurrence of any of the events specified in subsection (1), the liability of the insurer is, on the occurrence of any such event, limited to an amount specified in the policy that is not less than an amount calculated in the manner prescribed by the regulations.
Division 2 Insurance of buildings
83 Owners corporation to insure building
(1) The owners corporation for a strata scheme for the whole of a building must insure the building and keep the building insured under a damage policy with an approved insurer in accordance with this section.(2) The building is to be insured for at least the value of the building indicated by the last valuation obtained for the building in accordance with this Division.(3) The damage policy is to be in the name of the owners corporation.(4) This section does not apply to an owners corporation for a strata scheme comprising 2 lots if:(a) the owners corporation so determines by unanimous resolution, and(b) the buildings comprised in one of those lots are physically detached from the buildings comprised in the other lot, and(c) no building or part of a building in the strata scheme is situated outside those lots.(5) An owners corporation that breaches subsection (1) is guilty of an offence.Maximum penalty (subsection (5)): 5 penalty units.
84 Responsibility of owners corporation to insure where strata scheme is for part only of building
(1) Owners corporation and other owners of building to insure
The owners corporation for each strata scheme for part of a building and any other person in whom is vested an estate in fee simple in part of the building that is not included in a stratum parcel must insure the building and keep the building insured under a damage policy with an approved insurer in accordance with this section.(2) Building to be insured in accordance with last valuation
The building is to be insured for at least the value of the building indicated by the last valuation obtained for the building in accordance with this Division.(3) Damage policy to be in joint names
The damage policy is to be taken out in the joint names of the owners corporation and the other persons required to insure.(4) Calculation of proportions of premium for which each owner liable
The proportion of a premium for a damage policy for a building payable by the owners corporation or other person is the same proportion as the replacement value of the part (or parts) of the building subject to the strata scheme concerned or held in fee simple by the other person bears to the replacement value of the whole building.(5) Adjudicator may determine proportions of premium payable
On application made to it by an owners corporation or other person liable to pay such a proportion, an Adjudicator may determine the replacement value and proportion payable. The determination is binding on each person liable to pay such a proportion.(6) Action that may be taken if person fails to insure
If a person fails to comply with a requirement made by this section to insure a building or keep a building insured, any other person who has an obligation to comply with that requirement may:(a) apply to an Adjudicator for an order requiring the person who has failed to comply to join the applicant in taking out a damage policy for the building, or(b) take out a damage policy for the building in their joint names and recover as a debt from the person who has failed to comply the appropriate proportion, if any, of the amount of the premium for which that person is liable.(7) Proportions may be adjusted by Adjudicator in certain circumstances
If the use to which a part of a building is put causes an insurance premium under this section to be greater than it would be if it were not put to that use, a person liable to pay a proportion of the insurance premium may apply to an Adjudicator for an order adjusting the proportions payable so that the proportion payable by the person in whom is vested the estate in fee simple for that part of the building reflects the extra amount of premium.(8) Offence to breach insurance requirements
A person who breaches subsection (1) is guilty of an offence.Maximum penalty: 5 penalty units.
(9) Defence to offence of not insuring
In any proceedings for an offence under subsection (8), it is a defence to establish that the defendant was willing to join in the insurance of a building under a damage policy but that the policy could not be taken out because another person specified in subsection (1) was unwilling to join in the application for that policy.
85 Valuations to be obtained for the purposes of insurance
(1) A valuation of a building that is required to be insured under this Division must be obtained at least once every 5 years by:(a) if the whole building is the subject of one strata scheme, the owners corporation for that strata scheme, or(b) in any other case, the owners corporation for each strata scheme for part of the building and any other person in whom is vested an estate in fee simple in part of the building that is not included in a stratum parcel.(2) The valuation must be carried out by a person who has the qualifications prescribed by the regulations.(3) The proportion of the cost of a valuation that is payable by an owners corporation or other person referred to in subsection (1) (b) is the same as the proportion of the premium for the damage policy that is payable by the owners corporation or person in respect of the building concerned.
86 Can a person be exempted from the requirement to insure?
(1) A person required by this Division to insure a building may make an application to an Adjudicator for an order of exemption under this section, but an owners corporation may make such an application only in accordance with a unanimous resolution.(2) An Adjudicator may, on application and if of the opinion that compliance with the requirements to insure is unnecessary or impracticable, by order in writing:(a) exempt the applicant from compliance with those requirements unconditionally, or(b) with the consent in writing of the applicant, exempt the applicant from compliance with those requirements subject to a condition that the applicant takes out such insurance for the building concerned as may be specified in the order.(3) An Adjudicator must not make an order under this section unless each other person required to insure the building has consented in writing to the making of the order or has, before the making of the order, been given an opportunity to make representations to an Adjudicator with respect to the application for the order.(4) A consent for the purposes of this section may be given by an owners corporation only in accordance with a unanimous resolution.(5) If an owners corporation is required by a positive covenant to insure the building, an order must not be made under this section until:(a) at least 21 days after an Adjudicator has served notice on the authority having the benefit of the covenant of the intention to make the order, and(b) the Adjudicator has considered any representations made during the 21-day period to an Adjudicator by the authority in relation to the intended order.(6) A person to whom an exemption has been granted under this section is not under a duty to comply with a requirement to insure under this Division or any corresponding requirement of a positive covenant.(7) However, if the exemption was granted subject to a condition referred to in subsection (2) (b), the person is under the duty, if in breach of that condition.
87 What other insurance must an owners corporation take out?
(1) In addition to insurance taken out by an owners corporation in accordance with Division 2, the owners corporation must take out insurance:(a) in respect of any occurrence against which it is required by law to insure, including any insurance required by the Workers Compensation Act 1987 and the Workplace Injury Management and Workers Compensation Act 1998 to be taken out, and(b) in respect of damage to property, death or bodily injury for which the owners corporation could become liable in damages, and(c) against the possibility of the owners becoming jointly liable by reason of a claim arising in respect of any other occurrence against which the owners corporation, in accordance with a special resolution, decides to insure, and(d) against any damages for which the owners corporation could become liable by reason that, without fee or reward or any expectation of fee or reward, a person acting on behalf of the owners corporation does work in a building or on the common property in the strata scheme, and(e) of any other class prescribed by the regulations for the purposes of this subsection.Maximum penalty: 5 penalty units.
(2) Insurance taken out in accordance with subsection (1) (b) must be for a cover of not less than $10,000,000 for each event in respect of which any claim or claims may be made or, if the regulations provide for another amount, that other amount.(3) Regulations made for the purposes of subsection (2) may provide that the amount is to be calculated or determined in the prescribed manner.
88 What other insurance may an owners corporation take out?
(1) An owners corporation may insure any property that it is not required to insure by this Part and in which it has an insurable interest.(2) An owners corporation may take out insurance, at its own expense, in respect of either or both of the following:(a) damage to property, death or bodily injury for which a person holding the office of chairperson, secretary, treasurer or member of the executive committee of the owners corporation could become liable in damages because of an act or omission, committed or omitted in good faith, in performing the functions of that office,(b) misappropriation of money or other property of the owners corporation.
88A Insurance must be taken out with approved insurer
Any insurance that is taken out in accordance with this Division must be taken out with an approved insurer.
Division 4 Insurance claims and other matters affecting insurance
89 Can an owner take out insurance?
(1) Nothing in this Part limits any right of an owner to take out insurance.(2) Insurance taken out by an owner does not affect, and is not to be taken into consideration in determining, the amount payable to an owners corporation under a contract of insurance entered into between it and an insurer in accordance with this Part.(3) Subsection (2) has effect despite anything contained in the relevant contract of insurance.
(1) A person (including an owners corporation) is taken to have an insurable interest in the subject-matter of a contract of insurance entered into by the person in accordance with this Part.(2) The owner of a lot is taken to have an insurable interest in a building comprised in the lot while the building is subject to a determination referred to in section 83 (4).(3) This section applies despite the provisions of section 23 of the Imperial Acts Application Act 1969 or any other law relating to insurance.
(1) Insurance may be taken out by an owner of a lot in respect of damage to the lot in a sum equal to the amount secured at the date of the contract of insurance by mortgages of and any covenant charges affecting the lot.(2) Subject to the terms and conditions of the contract:(a) any payment to be made under the contract by the insurer in respect of damage must be made to the mortgagees and any covenant chargees whose interests are noted in the contract in order of their respective priorities, and(b) the amount of the payment must be the amount stated in the contract, the amount of the loss, or an amount sufficient, at the date of the loss, to discharge mortgages of and any covenant charges affecting the lot, whichever is the least amount, and(c) if the amount so paid by the insurer equals the amount necessary to discharge a mortgage of the lot, the insurer is entitled to an assignment of that mortgage, and(d) if the amount so paid by the insurer is less than the amount necessary to discharge a mortgage of the lot, the insurer is entitled to a sub-mortgage of that mortgage to secure the amount so paid on terms and conditions agreed on as provided by subsection (3) or, failing agreement, on the same terms and conditions as those contained in the mortgage by the owner.(3) For the purposes of subsection (2) (d), any insurer and mortgagee may at any time, whether before or after a contract of insurance referred to in subsection (1) has been entered into by an owner of a lot, agree on the terms and conditions of the sub-mortgage.(4) The contract of insurance is not liable to be brought into contribution with any other such contract of insurance except another contract of insurance that is in respect of damage to the same lot and relates to the same debt.
92 Insurance claim where owner at fault
If an insurer of an owners corporation accepts a claim by the owners corporation based on an act or omission by an owner of a lot, the insurer has no right of subrogation in relation to the owner based on that act or omission unless it is proved that the act or omission was wilful.
93 Action against owners corporation by owner
An owner of a lot may bring any action against the owners corporation of which the owner is a member that the owner might have brought against the owners corporation if the owner had not been such a member.
94 Owners corporation to rebuild
(1) If an owners corporation receives payment of money from an insurer in respect of destruction of or damage to a building, that money must be immediately applied by the owners corporation in rebuilding, replacing, repairing or restoring the building.(2) This section is subject to:(a) in the case of a freehold strata scheme, any order made under section 50 or 51 of the Strata Schemes (Freehold Development) Act 1973, or(b) in the case of a leasehold strata scheme, any order made under section 79 or 80 of the Strata Schemes (Leasehold Development) Act 1986.
(1) The Minister may, by order in writing, approve of any person or class of persons as an approved insurer for the purposes of this Part.(2) The Director-General must maintain a record of approved insurers.