Why Your Commercial Strata Property Must Be Insured Under a Strata Policy

If you own a commercial unit or office space in a strata building, it’s essential to understand that your property must be insured under a strata insurance policy, not a traditional Commercial Property Owners policy.

We often come across business owners and landlords who ask:

"Why can’t I just insure my strata-titled commercial unit like any other investment property?"

Here’s why choosing the wrong policy can leave you underinsured or even in breach of your legal obligations.

Commercial Strata = Shared Ownership and Shared Responsibility

When you own in a strata scheme, you're not just responsible for your individual lot — you also co-own the common property along with all other lot owners. This typically includes:

• Building structure (walls, roof, foundations)

• Driveways, car parks, and access ways

• Shared amenities (lifts, stairwells, fire safety systems)

• Plumbing, wiring, and mechanical systems servicing more than one lot

Because the building and infrastructure are shared, insurance must be arranged collectively through the owners' corporation or body corporate, under a strata insurance policy. A standard commercial policy is designed for freehold property, where a single owner is responsible for the entire building and land. It does not account for the shared nature of strata property.

Strata Insurance Is a Legal Requirement

Each state and territory in Australia has legislation that requires strata schemes — whether residential, commercial or mixed-use — to insure the property through a compliant Strata Insurance policy.

For commercial strata, these policies must include:

• Full replacement cover for the building and shared structures

• Public liability cover for common property

• Cover for owners corporation officeholders

• Additional protections (depending on the state), like machinery breakdown or theft by committee members

Failing to hold the correct cover can result in:

• Non-compliance with strata laws

• Rejected claims

• Legal disputes between unit owners and the body corporate

It Prevents Coverage Gaps and Disputes

If you try to place a strata-titled unit on a standard commercial policy, you’ll run into several issues:

• You can’t insure common property — because you don’t solely own it

• Your claim can be declined if the insurer discovers it’s part of a strata scheme

• You risk doubling up on cover (paying for insurance the body corporate already has)

• It creates confusion and conflict between you and the owners' corporation in the event of a claim

In short, using the wrong type of policy creates dangerous coverage gaps — and your investment just isn’t protected properly.

What Should Lot Owners Cover Separately?

While the strata insurance covers all shared property and the building structure, individual lot owners are usually responsible for their:

• Business contents and stock

• Glass within the tenancy

• Fixtures and fittings specific to their unit (depending on by-laws)

• Business interruption

• Public liability within the lot

• Tenant improvements

This is where a Commercial Business Pack or Office Insurance can complement your strata cover — without overlap or confusion.

In Summary

If you own a commercial property in a strata scheme:

• You must be insured under a compliant strata insurance policy

• A standard commercial property policy won’t provide correct cover

• The insurance must reflect the shared ownership and legal obligations of strata governance

• For your own space and business, a tailored Business Pack can cover everything the strata policy doesn’t

Need Help?

We’re here to help you determine:

✅ What’s covered by your strata insurance

✅ What additional covers you need as a unit owner or tenant

✅ Whether your property is properly disclosed and compliant