Strata insurance explained: what it covers in 2026

The owners corporation's building (damage) policy covers rebuilding or repairing the building, professional fees and debris removal.
NSW public liability cover must be at least $20 million; Queensland's minimum is $10 million.
Your furniture, appliances, curtains and carpets are generally not covered; get contents insurance.
Water damage: NSW Fair Trading treats water from inside your lot as the owner's responsibility, and water from common property as the owners corporation's.
Strata managers must give at least three quotes and show commissions and broker fees.

What insurance must a NSW owners corporation have?

Strata insurance is mandatory in NSW (NSW Government – Managing strata finances and insurance):

Policy	What it covers	Rule
Building insurance	Replacing or reinstating the building to as-new condition, professional fees, debris removal	Required under s 160 (two-lot detached schemes can opt out unanimously)
Public liability	Injury, death or property damage claims against the owners corporation	At least $20 million
Work health and safety (workers) insurance	Injuries to workers the scheme employs	Not needed if no direct employees and the scheme is residential only
Optional extras	Shared contents on common property, temporary accommodation	Decided by the owners corporation

NSW Fair Trading recommends a new building valuation every 2 to 5 years so the sum insured keeps up with rebuild costs. Insurance is paid from the administrative fund, so it is part of everyone's levies.

What does strata insurance not cover?

NSW Fair Trading is clear that the contents of an owner's property are not the owners corporation's responsibility. Even where damage is caused by a common property problem, personal items such as furniture, electrical appliances, curtains and carpets may not be covered by the owners corporation's policy. It recommends that residents, whether owners or tenants, consider contents insurance (NSW Government).

Queensland's definition is similar: the "building" for body corporate insurance excludes temporary wall, floor and ceiling coverings, carpets, curtains and blinds, lot air conditioners, removable tenant fixtures, and appliances not wired or plumbed in (Queensland Government – Building insurance).

Contents vs landlord vs building insurance

Policy	Who buys it	Typically covers
Strata building	Owners corporation	Structure, common property, fixtures that form part of the building
Contents	Owner-occupier or tenant	Furniture, belongings, often carpets, curtains and personal liability inside the lot
Landlord	Investor owner	Landlord's contents, and often loss of rent or tenant damage (check the policy)

Policy terms vary between insurers, so read the product disclosure statement. The strata policy and certificate of currency are strata records you can inspect.

Who pays for water damage?

NSW Fair Trading's repair guide splits it by source (NSW Government – Strata repairs and maintenance):

Owner: water damage coming from inside your property, plumbing in internal walls and fixtures (baths, toilets, sinks, showers), and broken appliances.
Owners corporation: water damage coming from common property, plumbing in boundary walls and under the floor, roofs, gutters and balconies.

Example from the guide: a leak under your kitchen sink is yours to fix; water coming through your wall from the upstairs neighbour's bathroom plumbing in a boundary wall is a matter for the owners corporation. In an emergency, an owner can call a plumber and seek reimbursement if they can show the cause was the owners corporation's responsibility, so keep photos and the tradesperson's written report.

Whether the strata policy then pays depends on the policy wording and the excess. Your scheme's by-laws or the common property memorandum can also shift who maintains particular items.

Who pays the excess?

NSW law does not set a single excess rule, so check your by-laws and the owners corporation's resolutions. Queensland gives a useful guide: if an event affects only one lot, that owner should usually pay the excess; if it affects two or more lots, or a lot and common property, the body corporate should usually pay, unless it decides otherwise. If damage happened because the body corporate did not maintain common property, it is reasonable for the body corporate to pay. An excess must not create an "unreasonable burden" on individual owners (Queensland Government – Premiums and excesses).

How do strata insurance claims work?

Make it safe. Stop the water or isolate the hazard, then tell the building manager or strata manager straight away.
Record it. Photos, video, dates and a tradesperson's report of the cause.
Lodge through the owners corporation. The policy is in the owners corporation's name, so the strata manager or committee usually lodges the claim.
Claim contents separately on your own policy.

NSW strata managers must record claims they make as part of their six-monthly reporting to the owners corporation.

Quotes and commissions

When sourcing insurance, a NSW strata manager must provide at least three separate quotes, or explain in writing why that is not possible. Quotes must show the base premium, commissions, broker fees and who they are paid to, and government levies. A strata manager cannot take a commission if the owners corporation arranged the insurance itself (NSW Government).

Other states

QLD: bodies corporate in building format plans must insure each building containing a lot for full replacement value, get an independent valuation at least every 5 years, and hold public risk cover of at least $10 million.
WA: strata companies must insure insurable assets for replacement value against fire, storm and tempest, lightning, explosion and earthquake (Landgate).

How Watchdog Strata helps

When a leak or damage happens, residents can log it as a ticket with photos and video, and the timestamped status history helps when a claim needs evidence of when the problem was reported. Emergency contacts and entry permission help management get into a lot quickly when water is coming through. Watchdog Strata does not arrange insurance or lodge claims.

General information only, not legal advice. Check the current legislation or ask a strata lawyer for your scheme.

Questions people ask

Does strata insurance cover my contents?

Generally no. NSW Fair Trading says personal items such as furniture, appliances, curtains and carpets may not be covered by the owners corporation’s policy. Owners and tenants should consider contents insurance.

Is strata insurance compulsory in NSW?

Yes. The owners corporation must hold building insurance and at least $20 million public liability cover. Some detached two-lot schemes can opt out of building insurance by unanimous resolution.

Who pays for water damage from the unit above?

It depends on the source. If water comes from common property, such as pipes in a boundary wall, it is usually the owners corporation’s responsibility. If it comes from fixtures inside the upstairs lot, that owner is usually responsible.

Who pays the strata insurance excess?

NSW has no single statutory rule; check your by-laws and resolutions. Queensland guidance says one affected lot usually pays, while events affecting several lots or common property are usually paid by the body corporate.

Strata insurance explained: building cover, contents, excesses and water damage