Tony Gioventu, addressing a concern from a small bareland strata of 18 units facing increased insurance costs, emphasizes the mandatory insurance requirements for strata corporations. The specific strata in question, with common areas including a roadway, clubhouse, guest suite, and park, was advised by their insurance broker that they could exempt themselves from a collective strata policy through a unanimous vote and a waiver. However, Gioventu clarifies that strata corporations, regardless of their type (bareland, building, industrial, etc.), cannot exempt themselves from mandatory insurance as per legislation. The only exception is if a single person owns all the strata lots.
Strata corporations are required to insure against prescribed perils listed in the Strata Property Act, such as fire, windstorms, and vandalism, along with maintaining a minimum of two million dollars in liability insurance for property damage and bodily injury. Optional insurance includes coverage for council members’ errors and omissions.
Gioventu points out the risks associated with common areas and the public park in the inquirer's strata, emphasizing the importance of proper insurance. He notes that many small strata corporations are often underinsured, mistakenly believing they are bareland strata when they are, in fact, required to insure all common property, assets, and fixtures. This advice serves as a warning against opting out of comprehensive insurance and highlights the potential risks and legal obligations of strata corporations.
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