Short answer
Strata building insurance covers the building and common property against damage, and the cost of repairing or rebuilding it so its condition is not worse than when new. Under NSW law it must also cover debris removal and the professional fees involved in rebuilding, and it is held for at least the building’s replacement value. It does not cover the contents of individual lots.
What the policy responds to
A strata damage policy generally covers the shared structure — the building itself, common areas, fixtures and common-property services — against insured events such as fire, storm and certain water damage, up to the sum insured set by the valuation. Under the Strata Schemes Management Act 2015, the policy must provide that a destroyed building is rebuilt (or a damaged part repaired) to a standard no worse than when new, and must cover the cost of removing debris and the fees of architects and other professionals needed for the work.
What the sum insured is meant to reflect
The building must be insured for at least the amount worked out under the regulations — in practice, its full replacement cost, including demolition, debris removal and professional fees, not just the bare rebuild. That’s why the sum insured is set from a replacement-cost valuation rather than the property’s market value, which can be very different.
What it does not cover
Building insurance stops at the structure and common property. It does not cover the contents inside your lot, your internal improvements, or your personal liability within your unit — those fall to an owner’s own contents insurance. Public liability for the common property is a separate cover the scheme also holds (see public liability insurance).
Making sure the cover matches the building
Cover only protects the scheme if the sum insured keeps pace with rebuilding costs and the policy actually renews on time. A system such as Straita keeps the policy, valuation and renewal dates together and flags them before they lapse, so a self-managed committee can see at a glance that the building is properly covered and approve the renewal with confidence.
Primary sources
- Strata Schemes Management Act 2015 (NSW) — requirement to insure the building (s 160) and what the damage policy must cover (s 161).
- NSW Government — Strata schemes (Fair Trading) — strata building insurance.