Is your Owners Corporation experiencing difficulties paying Strata Insurance premiums, as a result of the economic impact of COVID-19? We understand this is a real issue for OC’s around Australia, and want to assure you that there are options available to help alleviate the financial strain at this time.
In this article, we address frequently asked questions regarding alternative payment options for Strata Insurance renewals, empowering your OC to make informed decisions based on the individual circumstances at play.
Upon renewal of a Strata Insurance policy, how long is it before payment is due?
Whitbread have a 30 day credit term for payment on the renewal of all Strata Insurance policies. This means that the Owners Corporation have 30 days from the renewal invoice date before payment is overdue.
Is a payment extension available after the 30 days?
Given the current climate and subsequent financial hardship that many Australians are experiencing, some insurers have elected to extend their credit terms. In turn, this means that we may be able to provide you with more flexibility in regards to the length of time your OC has before the insurance renewal payment becomes overdue.
Credit terms differ between each insurer – please contact your Whitbread Strata Insurance Broker for more information on the credit terms your insurer is offering.
Is it possible to pay Strata Insurance on a monthly basis?
Should your OC be in a position whereby you cannot afford a lump sum insurance payment, there are monthly payment options available.
Premium Funding Programs are a flexible financial solution that enables an OC to spread the cost of Strata Insurance premiums over equal monthly instalments of up to 10 months.
How does it work?
Once a payment plan has been finalised and approved, the Premium Funder will pay the entire Strata Insurance premium directly to the nominated insurer. Going forward, the Premium Funder will then deduct the agreed monthly payments from your OC, in accordance with the terms of the contract.
Key points of Premium Funding:
- A low-cost financing option with competitive fixed interest rates.
- The interest paid to the funder can be tax deductible (speak with your accountant to find out more).
- It is simpler than a bank loan (fewer background checks and credit reports are required) and it does not require a guarantor.
Things to consider:
- Consider the interest rates you are paying to the funder, and how much this might add to the Strata Insurance premium overall. If the interest is tax deductible for you, this may not be an issue.
For more information on Premium Funding, click here.
Can the OC pay the Strata Insurance premium on a monthly basis directly through the insurer?
You may be under the impression that paying insurance on a monthly basis is a case of splitting the annual cost into 12 monthly payments, but unfortunately, it’s not that simple.
Things to consider:
- Some insurers do not facilitate payment plans, and therefore this may not be an option – contact your Whitbread Strata Insurance Broker for more information.
- Insurers who do offer this method of payment may charge extra and upfront fees for doing so - this therefore drives the overall cost of insurance up.
Can the OC opt for a shorter term Insurance policy?
Reducing the period of your Strata Insurance policy from the typical 12 month term, to 6 months, may be an option. This will mean that as opposed to paying for s full year of strata insurance up front, you will only need to pay a premium for 6 months of cover.
At the 6 month mark, your policy will again come up for renewal, and at that time you can either pay for another 6 months of cover, OR proceed with a 12 month renewal if the Owners Corporation’s financial position has improved.
There are however, some important things to consider:
- Some insurers don't offer short-term insurance policies - contact your Whitbread Strata Insurance Broker for more information.
- Should the Owners Corporation elect to proceed with a 6 month policy, the policy may be subject to rate increases imposed by the insurers during the short-termed period. By renewing the policy for 12 months, the OC avoids paying rate increases that occur throughout the year.
We are here to help. Please contact your Whitbread Strata Insurance broker for more information on payment options discussed in this article. We will be more than happy to assist you in finding a suitable solution for your Owners Corporation.
T: 1300 424 627
This article is not intended to be personal advice and you should not rely on it as a substitute for any form of personal advice. Please contact Whitbread Associates Pty Ltd ABN 69 005 490 228 License Number: 229092 trading as Whitbread Insurance Brokers for further information or refer to our website.