Ensure all details regarding construction, age, number of units, swimming pools, etc. have been provided.
a) Provide all details regarding materials used in construction of the walls, roof and floors.
As a result of new materials appearing in construction, insurers are becoming increasingly wary of the property risks they are choosing to insure.
Providing in-depth details regarding construction materials can result in more efficient placement of your insurance policy.
While the construction materials for floors and roofs have generally stayed the same (timber and/or concrete for floors, timber / steel / tiles for roofs), the materials used in the construction of external walls has become an area of immense concern.
If a property’s external walls are constructed of mixed materials (e.g. brick, blue board, besser block, rendered cladding, etc.) ensure you advise all materials used, and their respective percentage of cover.
b) Provide the buildings age
Some insurers will decline to provide a quotation due to the building’s age.
c) Number of units
This is required to accurately reflect the Building Sum Insured, and provide insurers with information regarding the scale of the risk exposure.
d) Swimming pools, spas and gyms
Swimming pools, spas and gyms can increase your risk profile due to an increased potential for bodily injury liability claims.
2. Aluminium Composite Panels and Expanded Polystyrene Cladding
The presence of combustible external cladding can have a significant impact on your ability to place or renew Strata Insurance.
If your strata property contains Aluminium Composite Panels (ACP), or Expanded Polystyrene (EPS) panels, insurers may refuse to provide a quotation, or request further information detailing the manufacturer, and the type of panels in use. This will help determine whether the panels present a heightened fire risk.
Why do insurers need information on cladding?
If illegal cladding has been used, it presents a greater fire risk and increases the possibility of a total loss event.
Following disasters such as the Grenfell Tower fire in London, and Melbourne’s own Lacrosse fire, the use of combustible cladding in residential construction has come under intense scrutiny.
As stated in a new Ministerial Order released in March 2018, combustible cladding has now been banned for use in both residential and commercial construction in Victoria, with many other states set to follow suit.
For more information on how OCs and Strata Managers can handle properties with cladding, see our insight article here.
3. The potential presence of asbestos
Is the strata building constructed prior to 1980? If so, there is every chance that asbestos materials may have been used.
Introduced in the mid 1950’s as a cost-effective material for heat and electrical insulation, asbestos cement was commonly used in residential construction.
Fast-forward to 2018, where it is now evident that that cracked or deteriorated asbestos panels can release microscopic fibres into the air. If inhaled, these fibres can cause several life-threatening respiratory diseases such as asbestosis, mesothelioma, pleurisy and lung cancers.
Why does my insurer need to know about asbestos?
If asbestos is a known risk at a property, insurers may either:
- decline to provide quotations as asbestos is often outside their underwriting guidelines, or
- impose policy conditions and higher excesses in order to cover the increased risk exposure.
4. A Defects Report
If you are aware of ‘known defects’ at the property, ensure a Defects Report is provided to your insurer or broker.
What happens if there are defects?
Depending on the severity of the building’s defects, insurers can:
- decide not to insure the property
- increase the insurance premium or impose higher insurance excesses
- give the OC’s a fixed period of time to get a defect rectified, and agree to insure the building, with policy restrictions until works are completed.
5. Commercial occupants
If the strata property is 100% commercially occupied, or a building with mixed tenancies i.e. residential with a commercial component, all business activities need to be provided.
Certain business activities can result in an increased risk profile and higher premiums. When there is a restaurant or cafe at a strata property, insurers will almost always require additional information upfront, such as:
- Is there a deep fryer at the premises? If so, what size (in litres) is the fryer?
- How often are the air filters and flues/ducts cleaned?
- Are professionals employed to clean the air filters and flues/ducts?
Why do I need to disclose business activities?
To arrange insurance for commercial strata or a mixed-tenancy strata property, insurers must be informed of the commercial business activities to ensure the risk can be appropriately evaluated.
6. Full claims history
A full claims history must be provided when requesting an insurance quote.
Insurers need to be fully aware of claims activity for a strata property to accurately calculate the premium for the risk, the correct excess(es) and policy conditions.
As specialists in Strata Insurance, Whitbread can provide you with professional advice and technical assistance to shed light on any special risks you need to be aware of.
For further assistance in applying for Strata Insurance, get in touch with a Whitbread Strata Insurance specialist today:
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 Licence Number: 229092 trading as Whitbread Insurance Brokers for further information or refer to our website.