Strata Insurance: If My Building Has Safety Risks, Will We Still Get a Policy?
What happens if your building has known safety risks, such as fire hazards, structural issues, building defects or outdated electrical systems? Will insurers still provide cover, and if so, under what conditions?
Let’s unpack how safety risks affect strata insurance and what your owners corporation can do about it.
What Insurers Look For
Insurance companies assess buildings on risk. The higher the risk, the harder (and more expensive) it can be to get cover. Some common red flags include:
Fire safety risks: flammable cladding, faulty alarms, blocked fire exits.
Structural problems: cracks, water ingress, or unstable balconies.
Electrical or plumbing issues: outdated wiring, leaking pipes, collapsed sewers.
Poor maintenance: neglected lifts, broken security systems, overgrown common areas, leaking roofs, hazards not attended to.
Non-compliance with regulations: building codes or fire safety standards not being met.
These don’t necessarily mean your building can’t be insured, but they can affect how an insurer responds.
Impact on Coverage
If safety risks are identified, insurers may:
Still issue a policy, but at a higher premium.
Add exclusions (e.g., no cover for water damage until certain repairs are made).
Impose conditions, such as requiring repairs within a set timeframe.
If standard insurers won’t cover the building, specialist insurers or brokers may step in to find a solution.
Reducing Risk to Improve Insurability
The best way to protect your building and keep premiums under control is to show insurers you’re actively managing risks. Practical steps include:
Conducting a risk assessment professional reports highlight issues and recommended fixes.
Carrying out essential maintenance promptly addressing leaks, cracks, and faulty systems.
Upgrading compliance ensuring fire safety and building codes are met.
Keeping good records documenting repairs and improvements for insurers.
Proactive owners corporations generally have an easier time securing policies and negotiating fairer premiums.
What If Cover Is Denied?
If your building is considered high-risk and a mainstream insurer won’t provide cover, don’t panic.
Options include:
Specialist strata insurers: who deal with unusual or high-risk buildings.
Insurance brokers: who can negotiate on your behalf.
Tips for Owners
Don’t ignore maintenance issues they can cost more in higher premiums than the repairs themselves.
Be upfront with your insurer. Failing to disclose risks could void a policy.
Work with your strata committee and manager to stay ahead of compliance requirements.
Final Word
Yes, you can still get strata insurance even if your building has safety risks, but it may come at a price. The good news is that by identifying, managing, and reducing those risks, you not only make your building safer but also improve your chances of securing affordable, comprehensive cover.
Mitchell Lipscombe is the Chief Operating Officer, BAC Insurance Brokers
With two decades of experience in the insurance industry, he is responsible for leading the firm’s strategy, operations and growth, with a focus on delivering value for clients and maintaining BAC’s position at the forefront of the strata sector.
Mitchell has built his career across a range of broking and leadership positions, developing expertise in operational management, client service and team development. He has completed an MBA with the Australian Graduate School of Management (AGSM) at UNSW. His leadership approach combines strategic insight with a practical understanding of the challenges facing brokers, clients and the wider insurance industry.
Disclaimer:
This article is intended for general educational purposes only and does not constitute legal or financial advice. Readers should seek independent legal and professional guidance relevant to their specific circumstances and jurisdiction.