Your Check-Out Checklist: 5 Steps to Keeping Your Property Safe This Summer

Strata News

With the holiday season tantalisingly close, it won’t be long before many of us flock to the beach or regional Australia for a well-earned summer break! Unfortunately, we see the incidence of preventable property damage peak over the holiday period.  Whether you are an owner-occupier, an investment property or holiday home owner, there are simple things you can do to help keep your property safe and secure while you’re away.



  1. Reduce risks associated with heavy rain and storms

Heavy rain can cause major damage if water is left to gather over time. Before you leave the property, be sure to:

  • remove dirt and debris from gutters and downpipes – consider metal leaf guards if the property is in a bushfire area
  • safely check the roof is well-maintained and water-tight
  • Inspect the foundations – check for any cracks or gaps
  • Identify any dark or wet spots, cracking, bubbling, or flaking of paint or plaster in the property. A damp, musty or mouldy smell can indicate a problem
  • Check your garden for dead or diseased trees – strong winds can uproot trees and cause branches to fall, leading to property damage and human injury
  • Pack away or secure your outdoor furniture to prevent damage.

For more information about reducing the risks of water damage, take a look at our article Strata risk on the rise: The dangers of water damage & how to stay protected.


  1. Disconnect non-essential electrical appliances & IT equipment – check power boards too

Ensure check power boards aren’t overloaded and inspect cords and plugs for damage. Place power boards on their sides to prevent dust from collecting in unused plugs.


  1. Ensure gas appliances, heaters and stoves are switched off and turn gas off at the mains if you’re away for an extended period


  1. Secure doors and windows

Last year, more than 230,000 Australian households experienced a break in, with a further 180,000 attempted break-ins (not to mention those resulting in property damage). Make sure your doors and windows close securely and the locks are in good working order. Don’t forget about sheds and garages too.


  1. Are you bushfire-ready?

If the property is within a bushfire prone area, there are actions you can take to reduce risk such as clearing vegetation, mowing the lawn, and installing fine steel wire mesh screens on windows, doors and vents. For more information, visit your state or territory fire agency’s website.




Shelley Thompson

Client Manager – Strata Insurance & Risk Solutions

Strata & Real Estate Snapshot: FY21 Q1-Q2

Insurance Updates

In this update, we share practical insurance insights from the quarter that’s been, and forecasts for the quarter ahead.



The past quarter has seen an ongoing trend of strata residential premiums increasing by around 5-10% nationally. The commercial strata property increases have continued to trend higher (above 10%). Non-strata commercial property insurance underwent a 5% rate increase last quarter (on average) and will likely undergo slightly higher increases in the coming quarter.

Scrutiny over natural peril risk exposures relating to catastrophic events continued to drive premium increases. The fifteen-minute summer hailstorm in Canberra was potentially the most damaging “cost per minute” event of the past year for the strata industry. Fallout from the summer bushfires has considerably impacted commercial property rates and property in alpine risk locations.



As the State election looms in Queensland, discussions have turned to Government taxes that are inflating North QLD premium. The QLD State’s Stamp Duty tax and Federal Government GST on North Queensland dwellings contribute a significant percentage of overall premiums.

In their November 2020 report, the ACCC will likely focus on further analysis and recommendations around exclusive insurer distribution agreements, third line enforcing and insurance commission in North QLD. The ACCC may also comment on the ongoing insurer exodus in North QLD, as the last quarter has seen another large international insurer cease writing risks in North QLD.

In NSW, increases to the compulsory NSW Emergency Services Levy (ESL) used to fund Emergency Services via property insurance premiums are pushing prices higher. Insurers have been required by government to increase their NSW ESL rates over the past quarter, these NSW Government ESL charges are seeing premium increases of approximately 5% across the State.


Example of 1 Oct 2020 NSW ESL increases from unspecified large NSW strata insurer:

Insurance Class ESL Increase From To
Commercial Strata 30.5% 39.5%
Residential Strata 15.5% 22.5%


The South Australia and Western Australia strata and commercial insurance prices continue to be among the lowest premium prices nationally. The Adelaide Earthquake and Perth hail and storm natural perils risks mean each insurer is pricing these locations in vastly different ways, some insurers have dramatically raised rates on new business in these locations, while other insurers are renewing with flat to minimal premium increases.



Alpine and above the snowline areas in NSW and Victoria have become the new challenge areas for FY21. Honan has created a limited bulk property placement solution into international insurance markets to secure coverage options. Locally, the alpine locations have seen insurers (strata and non-strata) coming off risks completely or scaling back the limits they will provide for bushfire exposure. Consequently, Honan is placing bushfire locations with either a defined perils program or a combined limit basis into international insurance markets, using higher bushfire deductibles and excess solutions to secure coverage for snow lodges and strata buildings.

In Victoria, the pandemic will likely further impact the challenge of insuring unoccupied locations. Overall, the commercial property insurance rates have been steady at 5% rate increases over the past couple of years. Some movement above this 5% increase is now likely for a third of renewals.



We’re With You All The Way

Feel free to reach out to discuss your situation and address any questions or concerns.


Kieran Drum

National Head of Strata

0488 688 656


Strata Public Liability Cover: FAQs & Top Tips for Lot Owners & Strata Managers

Strata News
Are we covered? And for what?” These have become the most commonly asked questions from Lot Owners, Committee Members and Strata Managers following an incident in a common area resulting in an injury, or damaged personal belongings.


It is relatively well known that Public Liability (PL) cover is a mandatory requirement for a Strata scheme (also known as Owners Corporation or Body Corporate), and that each State’s Strata Laws come with minimum requirements for PL cover, there is less public understanding around what to do in the instance of a PL event, and what the insured party is covered for.

In this article, we address some of the FAQs, debunk a common myth associated with PL claims, and share some helpful actions Lot Owners and Strata Managers can take in the event of a claim.


What Losses Are Covered by PL Insurance?

PL cover provides protection to an Owners Corporation (OC) for losses arising out of its legal liability for third party property damage or personal injury, subject to policy terms and conditions.

This includes settlement awards, damages awards and court-ordered costs, up to the insured Limit of Liability shown on the policy schedule.

In addition, PL insurance extends to cover the investigation and legal defence costs if the insurer does not perceive the OC to be liable for losses claimed by the third party claimant.


Whose Interests Are Protected?

The OC is the insured entity as named on the Strata Policy Schedule. This means that the Policy only responds to claims made against the OC. It does not respond to claims made against Lot Owners in their private capacity. That said, certain policies may extend cover to other parties who may be enjoined into proceedings against the OC by the claimant. For example, both Strata Unit Underwriters and Strata Community Insurance’s residential and commercial strata policies include an extension of cover for employees of the OC, office bearers and volunteer workers under certain circumstances.

The above policies also extend to Strata Managers if they have been enjoined by the claimant solely by virtue of the relationship between themselves and the OC under certain circumstances.


Myth Buster: Can Lot Owners & Committee Members Claim Against OCs?

Questions often arise as to whether a Lot Owner or Committee Member can claim compensation against the OC for personal injury or property damage. The answer is YES, and it will be a claim considered under a PL policy. It is important to note, however, that the Policy is intended to indemnify the OC within Policy terms and conditions, but not to indemnify the Lot Owner, Committee Member or any other third party claimants. This means that when the insurer does not perceive the OC to be liable, the insurer will deny liability on behalf of the OC to the Lot Owner or other claimants and will not be compensating the Lot Owners or other claimants for losses.


Dos & Don’ts in the Event of a Claim

There are numerous policy conditions applicable to PL claims. Failure to comply can result in insurers limiting their contributions or refusing to grant indemnity.

It is a requirement to notify insurers of circumstances that could give rise to a public liability claim, even before legal action is threatened or taken. For example, if you are aware of a fall on common area leading to a personal injury, reporting it right away ensures best practice compliance with policy conditions.

Insurers have considerable discretion and control over PL claims once indemnity is granted. So, preserving the incident area, co-operating with claim investigators and avoiding direct communications with the claimant allow insurers to understand the circumstances and manage the claim efficiently and effectively.

Strata policies also provide insurers with control over appointment of solicitors and the decision-making process, including whether to accept liability on behalf of the OC or alternatively defend its position. So, avoid negotiating with the claimant. Allowing your broker and strata insurer to work together and manage such communications can prevent you making statements which can be interpreted as an admission of liability or an offer of settlement.


We’re With You All The Way

Our Strata Team has a wealth of experience in PL claims and can guide you in the right direction from the moment you become aware of circumstances that could give rise to such claims, through to advising on critical actions required to help protect your interests.

We can also support you in identifying your risk exposures and advise you on measures to minimise your exposure to costly and unnecessary PL claims.

Please don’t hesitate to reach out at any time.


Annie Wang    

Associate Claims Executive


Professional Indemnity Insurance: Red Flag Alerts for Strata & Real Estate

Strata News

Following consecutive years of underperformance, poor underwriting returns and reduced insurer capacity, Professional Indemnity (PI) premiums have risen in most industries. The Strata and Real Estate markets are no exception, with the former experiencing sizeable increases to PI premiums as a result of landmark building fires such as Melbourne’s Lacrosse Tower (2014) and London’s Grenfell Tower (2017). Alongside such events, growing concern around the risks of combustible cladding in general, have placed properties around the world under heightened insurer scrutiny.


ATTN: Strata Managers – A Note on Combustible Cladding

Appointed to act as an administrator on behalf of the Owners Corporation, Strata Managers are responsible for arranging maintenance works, securing adequate insurance, building projects, valuations and bookkeeping. The sheer scope of a Strata Manager’s role presents many exposures for insurers to consider, with the non-disclosure of combustible cladding at the forefront of their concerns. An omission of this magnitude could lead to a sizeable claim brought against the Strata Manager’s PI policy by the Owners Corporation, in the event that a claim is declined by its insurer. To help combat this exposure, and allow insurers to continue providing cover, a non-compliant external cladding exclusion is now applied as standard on most policies. This includes other professions and industries such as PI policies for engineers and architects. The general intent of the exclusion is to highlight there is no coverage for claims arising out of or connected with any building products used in the construction of the building, that was not compliant and did not conform to the applicable building standards. Special attention should be paid to the definition of such products so an accurate disclosure can be made by the Strata Manager when securing appropriate insurance.

You can learn more about identifying combustible cladding in our article: Combustible cladding – A timely reminder for owners, residents and strata managers.


ATTN: Real Estate Professionals – A Note on Changed COVID Practices

Traditional real estate professionals involved in sales, leasing and valuations are likely to experience several risks in the short to medium term in response to changed working practices brought about by COVID-19. In a recent webinar, leading financial lines insurer Dual Australia, predicted a potential crash in property prices could lead to an increase in claims brought against real estate agents and valuers. Given the constraints on valuers throughout the COVID-19 period, they have been restricted to desktop valuations, which could compromise the accuracy of assessments and therefore heighten potential PI risks.


The Importance of Accurate Assessments: Broker is Best

Whilst we’ve focused on Strata & Real Estate here, it is important for professionals in all industries to stay abreast of regulatory changes, and to understand their implications for business operations. At Honan, we take our professional duty as insurance brokers incredibly seriously. For all clients, we regularly perform robust, accurate risk assessments, and transfer risks as required. As we move into a more litigious society, the importance of an adequately insured Professional Indemnity policy cannot be overstated.


We’re With You All The Way

Our specialist team of Honan brokers are available to discuss your unique risk profile. To learn more about how we can help, feel free to reach out at any time.


Joshua Boyd   

Client Manager, Strata Insurance & Risk Solutions


+61 439 391 289


Nathan Mauriello 

Client Executive, Strata Insurance & Risk Solutions



If you’re based outside Victoria, please contact your local broker via this link.

VIC Stage 4 Implications for Strata Insurance Claims

Strata News

The enactment of State Government COVID-19 Stage 4 restrictions across Victoria has seen a number of businesses classified as ‘non-essential,’ and therefore restricted in operations or closed altogether. As a result, the speed at which many business properties are now able to be repaired in the event of an insurable loss, has been markedly reduced. Here’s what businesses need to know about insurance claims during Stage 4 restrictions:


Emergency or urgent repair can proceed  

The Department of Health and Human Services (VIC) has confirmed that emergency or urgent repair works are exempt from Stage 4 trading restrictions, including works required to address health and safety issues.  This exemption applies to maintenance repairs and insurance repairs. Therefore, in the event of accidental damage to insured property giving rise to a strata insurance claim, essential repairs including emergency make-safe works can proceed as usual.

Panel builders* and loss adjusters can continue to attend sites for critical claims, including:

  • When there is a risk to the health and safety of occupants
  • The property is rendered unfit for occupation due to the damage
  • When there is a risk of further extensive damage to the property or a risk to the health and safety of occupants.

Panel builders will continue to take all precautions as appropriate, including full adherence to Personal Protective Equipment (PPE) requirements and taking the special needs of residents at risk into account. When emergency and temporary accommodation entitlements under such policies are triggered, insurers and loss adjusters will continue to assist affected owners in securing alternative accommodation with minimal interruption.


Non-critical claims on hold

For as long as Stage 4 restrictions are in place, panel builders cannot attend sites for non-critical claims such as:

  • Minor property damage not rendering the property unfit for occupation
  • Property damage not involving the risk of further damage
  • Property damage not giving rise to health and safety risks
  • Owner/occupier requests for works to be put on hold due to COVID-19 risks and concerns.

It is expected that Stage 4 restrictions and the COVID-19 landscape will result in delays to ongoing and imminent insured repair works.


Safety remains paramount  

While the extension of temporary accommodation allowances is contingent on the circumstances relevant to any particular claim, our strata insurance partners continue to reiterate the safety of customers and the broader community remains paramount. As such, extensions to temporary accommodation will be considered on a fair and reasonable basis.

What constitutes “critical” or “non-critical claims” will depend on the circumstances specific to each claim, and the circumstances of any owner / occupier involved.


We’re with you all the way.

As always, our Honan Strata Team is here to assist you through the ever-changing conditions ahead. To remedy your queries or escalate matters requiring urgent attention with insurers, loss adjusters or panel builders, we’re only ever a call away.


Sushendra Fernando  Senior Claims Executive

+61 3 9947 4375


Poppy Foxton – Head of Claims

(02) 9299 0767


Kieran Drum – National Head of Strata

+61 3 9947 4348


*Panel builders are appointed by Insurers as preferred repairers and allow insurers to guarantee the standard of work.

Insurance for Aged Buildings: Minimising Risks to Optimise Claims

Strata News

With approximately $1bn worth of insurance claims logged annually in Strata, the maintenance and repairs of aged buildings is becoming a significant issue for Owners Committees and Strata Managers across Australia. In the following article, we’ll cover some common causes of losses in aged buildings, and actions owners can take to minimise the risk of loss. We’ll also explain how gradual and hidden damage can impact claims. 


Safety First: Electrical Wiring 

  • Wiring can deteriorate over time, particularly when exposed to moisture or used at higher loads. Watch for electronics mounted on wood, ceramic fuses and poorly arranged wiring. ​High electrical demand may overload circuits, so be sure to test safety and overload switches. ​
  • To reduce the risk of electrical faults and fire, have your non-destructive testing carried out by a certified and licensed electrician. Comprehensive testing should include auditing of visual wiring, electrical circuit scanning, plus annual thermographic (infrared) scanning for loose connections, load imbalances, overloading and hotspots. 


Red Flags: Roofing & Guttering

Conducting regular roof and gutter inspections, alongside actioning any required maintenance can reduce the chance and/or severity of loss amid untoward events. 

Be sure to review the following in your inspection:

  • Structural timber: inspect under the roof for cracks caused by the roof weight too. 
  • Rust: typical problem spots include where metal sheets overlap, around screw or nail holes, and where previous impact damage has occurred. Leaks in tiled roofs are normally caused by cracked mortar, loose ridge capping and cracked tiles. ​
  • Inspect all drains for blockages, debris and vegetation. Overflowing drains may indicate blockages or a need for more drains and downpipes to be installed in accordance with industry standards.
  • Plumbing leaks and failure: check for evidence of corrosion, rust or decay to piping and tubing used on both incoming and outgoing water supply lines. Supply lines made from copper typically have a lifespan of 70-80 years, while brass or galvanised steel lines typically last 80-100 years. This said, supply lines are often under constant pressure, and the smallest failure can result in significant water damage to the building and its contents. Outgoing drain lines are often made from Polyvinyl Chloride (PVC) which normally has a lifespan of 25-40 years. Check for pipes that are leaking, cracked, have darkened or changed colour. Joints, connections, and old flexible couplings are typical weak spots. To ensure you’re ready to troubleshoot leaks, familiarise yourself with the location for the property’s main water isolation valve.​


Beware: Building Materials 

  • Combustible materials: it is common for aged buildings to contain combustible materials such as timber. Caution should be taken when conducting works/renovations on or near these materials. For further information, be sure to review Honan’s recent insights on identifying combustible cladding.
  • Asbestos: In 2003, an Australia-wide ban on asbestos was enforced. Prior to this, asbestos was used in many products including walls, fencing, downpipes and eaves. In the instance of a loss, the presence of asbestos can significantly increase repair/rebuild times. Be sure to review your insurance coverage and its response to property damage claim clean up in the instance Asbestos is present – this is an important consideration for a claim payment. 


Types of Damage & Implications for Claims

Gradual damage is damage to property that may start small but is visible. Gradual damage includes wear and tear, corrosion, rot, and mildew. An example is water damage to walls or ceilings such as stains and bubbling paint. Such damage may appear to be minor at the onset but has the potential to worsen over time due to ongoing seepage. This type of damage is generally NOT covered by insurers. Such damage is distinct from sudden, accidental water damage (which Strata policies generally cover). Gradual damage can trigger a gradual deterioration exclusion, which is common to all Strata policies. 

Hidden gradual damage is NON-visible. It includes rot, mildew or other deterioration caused by water leaking from a water pipe behind a wall or waste disposal pipe. An example of hidden gradual damage could be a slow leak from a rusted or corroded pipe gradually damaging a wall/cavity behind a shower, including mould, rot and mildew concealed by shower tiles. Such hidden gradual damage is usually classified as long-term damage/gradual deterioration. However, some insurers are open to considering cover for resultant damage on the basis that the insured could not have reasonably known about the leak due to it being hidden. Many insurance policies also contain mould and mildew exclusions, which can further complicate the claims process and reduce settlement outcomes.


We’re with you all the way.

Upholding a regular schedule of maintenance and inspection can help avoid issues with insurance cover related to aged buildings. To find out how Honan can help secure protection for your Strata assets, please reach out at any time. 


Kieran Drum – National Head of Strata

+61 3 9947 4348


Poppy Foxton – Head of Claims

(02) 9299 0767


Combustible Cladding – A Timely Reminder for Owners, Residents & Strata Managers

Strata News

June 2020 marks three years since the devastating Grenfell Tower Fire in London. More recently, fires in high rise residential Dubai properties, alongside Melbourne sites Neo200 and Lacrosse, have led to increased media exposure and public anxiety around the issue of combustible cladding. So what exactly is cladding, how can property owners identify combustible kinds, and most importantly, what can be done to mitigate the risks? 


What is cladding?

A wide range of cladding is used around Australia, but not all of it is combustible. The two types posing risks to residents and the wider community include Aluminium Composite Panels (ACP) and Rendered Expanded Polystyrene (EPS). ACP and EPS are popular external cladding choices because they are sturdy, weather resistant and can be visually appealing. In the event of a fire, however, ACP and REP can increase the rate at which flames spread; thereby placing building occupants and those in the immediate vicinity, at significant risk.


How can I identify types of cladding?

A visual inspection of your property is the easiest way to understand what types of cladding have been used. Because cladding is typically used for aesthetic purposes, it is usually easy to identify. Most commonly, cladding will feature on balconies, awnings, around windows, main points of entry and external walls. 


My building has cladding: how do I know if it’s combustible?

If you built your home using a builder, or know which company built your home:

  • contact the builder/supplier for the product specifications used on your property. They should have a complete list of all the building products used. 

If you’re a strata manager or a resident in an apartment/multi-story high-rise building with combustible cladding:

  • contact your building/strata manager or owners’ corporation for more information and/or
  • reach out to your State or Territory cladding authority or taskforce:

VIC | NSW | QLD | SA | WA | TAS | NT | ACT


What if I can’t locate information on my building’s cladding?

In this instance, source a cladding audit from a qualified fire engineer. These audits can range from remote analysis to comprehensive onsite assessments. Cladding audits may also include testing of cladding products to specify exact materials and their combustibility. These reports will provide clarity on the state of cladding on your property.


We’re With You All The Way

Our specialist team of Honan brokers and risk engineers are ready to guide and support property owners through their cladding concerns and unique risk profiles. To learn more about how we can help, please speak with your dedicated Honan broker, or reach out to me at any time:


Joshua Boyd – Client Manager, Strata Insurance & Risk Solutions         

+61 439 391 289

Strata risk on the rise: The dangers of water damage & how to stay protected

Strata News

According to two of the largest Strata Insurers, water damage from internal and external sources is now the single most common cause of claims. And what’s more, not only are water damage claims on the rise, but they’re becoming more costly. Chubb Insurance for example, has reported an increase in average water related claim costs of 72% from 2014 to 2018, bringing the average claim to $30,361.  In 2018, Insurance industry claims data disclosed more than 30,000 claims for water damage, at an estimated value of $320 million. 

At Honan, our largest water damage claim was submitted in 2019, at a value exceeding $500,000.  In addition to financial hardship, the costs to occupants in time, personal inconvenience and emotional toll can be substantial.  


To help mitigate risks associated with water damage to your Strata property, we’ll step you through: 

  • common issues to avoid
  • the impact to renewals and premiums
  • simple actions you can take to reduce the likelihood and severity of a water damage claim. 


Common causes of water damage

  1. Burst Braided Flexi Hoses

IAG reported that in 2016, Braided Flexi Hoses caused 22% of water damage claims in Australian Households. There are numerous Braided Flexi Hoses on the market, with life expectancies ranging anywhere from 2-10 years. Deterioration of Flexi Hoses is caused by incorrect installation, causing small leaks that allow chloride deposits to form on stainless steel braiding, leading to corrosion. Water hammer also increases stress on these hoses, and chlorine from cleaning chemicals (often kept under sinks or vanities) can cause rapid corrosion.


  1. Appliances, internal hot water systems & air-conditioning systems

There are now more “plumbed in” appliances in our houses and apartments. Washing machines, dishwashers, water filters, InSinkErators, and refrigerators all have hoses and connectors that may be of varying quality. Internal hot water systems generally have a life expectancy between 7 – 10 years. Air-conditioning outlet pipes can become blocked, causing water to back up and leak back into the property. Make note of the age of such appliances and systems in your Strata property, and check them at timely intervals for wear and tear. 


  1. Blocked drains

Modern homes typically have more internal drain holes to safeguard against points of leakage and overflow.  More drains can result in more points of blockage by foreign material, paper, hair or even roots and leaves. If you have a new Strata property, ensure your tenants are vigilant with cleaning of pipes, and dispose of waste in bins rather than washing down the sink as much as possible. 


  1. Holiday periods

There is a strong correlation between the severity of water damage claims and holiday periods when tenants are away. The time taken between when the leak first occurs, to when it is detected and shut off, can often mean thousands of dollars in difference to damage. Be sure to set clear guidelines for your tenants on ‘out of property’ periods; providing them with a household maintenance checklist to address pre-departure is highly recommended. You may even like to suggest switching off water mains entirely through such a time.  


How do adverse water damage claims impact renewals & premiums?

When it comes to claim history, insurers are generally more concerned with the frequency rather than severity of claims. To them, a high frequency of claims suggests there is either a building defect, or a lack of maintenance causing repeated water damage. A large, one-off water damage claim will likely have less of a negative impact on renewal than multiple smaller claims.

Insurers will generally respond to an elevated history of water damage claims by declining to renew or applying very large water damage excesses and/or increasing the premium.  For instance, we have one scheme with a history of significant water damage claims (three over $200,000) that now has a $50,000 water damage excess and the premium increased by 75% on renewal.  Schemes that have a poor water damage claims history are difficult to renew, as insurers see the same claims history and are equally risk averse. The lack of competition will drive premiums up.


Top tips for reducing the risks of water damage:

  • Consult your plumber about installing water stop flow valves to the main water pipe into the lot. The device detects changes in water pressure and automatically shuts off water when a preset value is reached.  These devices can be mechanical or electronic, and often reduce the severity of water damage claims considerably
  • Turn water mains off when away on holidays
  • Replace flexi hoses in all appliances, sinks and cisterns at least every 10 years, those in cupboards where chemicals are stored should be replaced every 5-7 years
  • Be vigilant in checking ceilings for water marks, this may indicate the unit above has a slow leak in the bathroom, laundry, or kitchen
  • Where leaks are detected in roofs, waterproof membranes and/or rendered walls or expansion joints, have the site of the leak repaired immediately. If a claim develops and it is shown to be a known issue that was not rectified, the claim may not be paid. In turn, this can cost the Body Corporate even more to fix
  • Hot water systems have a limited lifespan – keep an eye out for water in the drip tray or puddles around the unit
  • Where safe and possible, ensure gutters and drains are clear of leaves and remain unblocked
  • Have a preventative maintenance plan for the Body Corporate, budget for the plan and make sure it is followed. 


We’re with you all the way.

From understanding the risks faced by Strata building managers, and advising on how to prepare for the future, we are only a call or email away. To learn how Honan can further support your business, please reach out at any time. 


Chris Glass – State Manager, QLD

0419 566 258


COVID-19: Business Interruption, Contingency and Workplace Risk


On 30 January 2020, the World Health Organisation declared the Coronavirus outbreak a Public Health Emergency of International Concern. We sympathise with everyone who has been impacted by the virus and Honan Insurance Group have implemented additional resources and contingency planning to ensure that we remain able to provide advice, insurance and support to our clients as the situation develops.


As the impact of COVID-19 on local and international economies continues to evolve, we highlight to all clients the need for management to consider financial, strategic and business risks to operations. In this article, we examine the key areas we have received the most queries about: Property and Business Interruption, Business Contingency and Workplace Risk.


Industrial Special Risks* (Property and Business Interruption) Insurance & COVID-19 

(Potential Policy Response under ISR Mark IV Policy)

It is expected that many businesses will suffer disruption as a result of the spread of the Coronavirus (COVID-19).   With the situation changing rapidly and restrictions on the movement and gathering of people (both at local level and internationally), there is no doubt many companies will suffer from loss of revenue and/or additional expense.


Property Damage

Generally, property policies (including office risks) cover physical loss, destruction or damage to insured property resulting from a covered peril (all risks).  In the case of the Coronavirus, the ISR (Mark IV) policy exclusion 4(a) excludes physical loss destruction or damage occasioned by or happening through disease.  Office-related risks also have very similar exclusions. The ISR policy can include a myriad of endorsements with some coverage writebacks for costs to clean-up a site (where required by order of a public authority), however, this would need to be reviewed on a case by case basis.


Business Interruption

An ISR insurance policy extends to include under Section 2 coverage for business interruption.  This cover traditionally applies only to interruption caused by an insured material damage event such as fire, storm, impact or accidental damage.

In addition, cover is extended to include closure of the business by public authority for several risks including human infectious or contagious diseases.   This coverage was designed to cover events such as an outbreak of Legionnaires disease or measles which could affect one or two buildings and a small number of businesses.  Some ISR policies can extend to provide coverage for outbreaks in a 20-50km radius from the insured location.

Specifically, in relation to the COVID-19 outbreak, the ISR policy contains a specific exclusion for loss resulting from interruption of or interference directly or indirectly arising from or in connection with Highly Pathogenic Avian Influenza in Humans or any other diseases declared to be quarantinable diseases under the Quarantine Act 1908 and subsequent amendments.

Following the H5N1 virus (avian influenza) outbreak in 2006 and the H1N1 virus (swine influenza) outbreak in 2009, insurers adopted this exclusion as a market standard position in Australia.

The Australian Quarantine Act 1908 was replaced by the Biosecurity (Consequential Amendments and Transitional Provisions) Act in 2015.  COVID-19 was added to the Act as a listed (quarantinable) human disease on 21 January 2020, under Biosecurity (Listed Human Diseases) Amendment Determination 2020 (Cth) F2020L00037.


Listed Human Diseases under the Act are thus now:

  • Human influenza with pandemic potential
  • Plague
  • Severe acute respiratory syndrome (SARS)
  • Middle East respiratory syndrome
  • Smallpox
  • Viral haemorrhagic fevers
  • Yellow Fever
  • Human Coronavirus with pandemic potential

As a result of the above, the business interruption section of your insurance will not provide cover for COVID-19 disruptions. As with any other threat it is important to consider what risk management measures you can introduce to mitigate the risk to your staff, customers and business.


Risk Management Tips: How to avoid infection

Here is a short list of ways to minimise the spread of Coronavirus

  • Practice good personal hygiene.
  • Avoid contact with anyone with or suspected of having Coronavirus.
  • Boost your immune system by eating well, exercising, having enough sleep, and keeping your stress levels under control.
  • Cancel or delay any travel until the crisis is over.


Recommended Actions for your organisation:

  • Implement a home quarantine regime for anyone that has travelled to an infected country or is likely to have been in contact with someone infected with Coronavirus.
  • Review and update if necessary human resource (‘HR’) policies on fitness for work including possible quarantining of employees and formalising the requirement for employees to remain off work if affected.
  • Consider or extending flexible working arrangements to reduce the likelihood of the spread of the virus in the workplace or the community.
  • Update travel rules and arrangements limiting non-essential business travel.
  • If not already in place, provide sanitized hand washing stations for use by staff and visitors.
  • Review arrangements for workplace hygiene and cleaning protocols including “cough and sneeze” etiquette.
  • Protect the mental wellbeing of employees concerned about the Coronavirus.
  • Ensure clear and honest communication to employees on their welfare.


Keep Informed

Everyone should remain alert for updates and advice from the relevant authorities on additional steps to manage the spread of the disease. The health department in each state is providing excellent resources and advice and regular updates. Before travelling, check for and take the advice of any travel warnings on


Business Continuity Management Planning

A pandemic is just one risk facing modern organisations.   Having a fully documented and exercised business continuity management plan is important for every business.  Honan has resources to assist you in developing a business continuity plan and please speak to your Client Manager for further information.

*Property/Office/Business Interruption


Business Contingency

The Coronavirus may impact revenue for businesses through:

  • Production slowdown & disruption to workforce (sick or quarantined employees)
  • Disruption to Supply chains and supplier services
  • Decrease (or increase) in demand for stock
  • Large scale closures of consumer markets and public spaces due to quarantine
  • Delays in customers paying outstanding invoices within normal trading terms
  • Economic slowdown on global and local scale


Whilst there is coverage available under Corporate and Business Travel insurance policies in certain circumstances, there is limited cover available under most standard General Insurance policies for loss of trade and interruption to business operations.

As a general rule, it is not viable for most insurance markets and products to cover “global pandemics” as an insurable event. This is because the financial impacts of a pandemic are not quantifiable, meaning risk cannot be priced accurately or sustainably by insurers. If you do suffer a loss, please contact our team to discuss the specific circumstances and how your policy may respond.

Whilst insurance cover availability may be limited, businesses can prepare.  We would strongly recommend formation of a working committee to evaluate the impact to business as conditions continue to evolve, with accountability to the board or executive team.


Considerations for a COVID-19 working group should include:

  • Review of policies, procedures and protocols in place to protect the safety and wellbeing of employees and prevent further risk of spread of COVID-19 within the workforce and community.
  • Assess venerability of IT Infrastructure (including stress-testing) for an organisation’s ‘Work from Home’ capabilities in the event of premises closure/staff quarantine
  • Consider the impact on supplier and customer contracts to meet delivery/service obligations from both parties (how Contractual Penalties & Force Majeure clauses may be applied)
  • Evaluation of possible supply chain disruptions and how these can be mitigated or bypassed through appropriate work arounds and contingency planning
  • Evaluation and stress testing of stock levels and planning for inventory shortage as supply from China recommences operations
  • Review ability to support alternative revenue streams that are not as severely impacted by COVID-19
  • Review communications with key customers and other stakeholders to maintain relationships and manage challenges in a sensible, commercial & collaborative manner
  • Review credit and debt facilities to ensure that cash is available in the short term to manage financial impacts and support increased business restart
  • Communicate with creditors if a reduction in revenue has the potential to impact on cash flow and financial obligations.



Workplace Risk: Workers’ Compensation and Coronavirus (COVID-19)

There has been much discussion around the exposure and potential liability under Workers’ Compensation should an employee or contractor contract Coronavirus.

As outlined by Safe Work Australia (2020), Workers’ Compensation arrangements differ across schemes, however there are common threshold requirements that would apply in the case of COVID-19:

  • that the worker is covered by the scheme, either as an employee or a deemed worker
  • that they have an injury, illness or disease of a kind covered by the scheme, and
  • that their injury, illness or disease arose out of, or in the course of, their employment.

Compared to work-related injuries, it is difficult to prove that a disease was contracted in, or caused by particular employment. In the case of a virus such as COVID-19, establishing the time and place of contraction may become increasingly hard. We have sought clarity from our legal partners and obtained publications from the governing state regulators. Their view is it will be challenging to prove workplace exposure to Coronavirus as questions will arise as to the exact time and place of contraction.

For coverage to exist, a determining authority would need to be satisfied that the employment significantly contributed to the employee contracting the virus. For viruses, it can be difficult to accurately determine the exact time and place of transmission. As a result, it may be difficult to determine that employment significantly contributed to the virus.

However, where an employee’s employment puts them at greater risk of contracting the virus the significant contribution test may be easier to meet. For example, if the employment involves:

  • travel to an area with a known viral outbreak
  • activities that include engagement or interaction with people who have contracted the virus
  • activities that contravene Department of Health recommendations.

Each workplace illness would need to be considered on its individual merits, having regard to the individual circumstances and evidence in relation to the claim. More information is available here: Comcare Australia.

Deeming an illness or disease as work related and unique to the workplace may require court intervention to distinguish medical opinion from legal facts. There is no liability determination available to declare an illness or disease compensable or non-compensable; each case is determined on its own merits and circumstances.

Although you may not be able to eliminate the potential risk of employees contracting Coronavirus while carrying out work, you must do what is reasonably practicable to minimise the risk of employees contracting Coronavirus.


Coverage while travelling overseas for work

Any liability or workplace contribution applies to both employees working overseas and those working within Australia. Each case will be determined on its own merits and circumstances.

Note: For international employees engaged locally, state or country specific legislative conditions will apply. Queries should be directed to Honan. Depending on the state of urgency, travel restrictions and periods of self-isolation may need to be considered and communicated to all employees and contractors.


Employer Support

It is important that employers refer to internal policies and procedures to ensure measures for employee safety are in place. Honan has resources to actively advise on Workplace Risk exposure, as well as Legal and Work Health and Safety partners who can assist with ongoing management of this changing environment.


All companies will need to keep up to date in what is evolving environment.  Please see below some resources to do so:

Australian Government Department of Health

Safe Work Australia


McKinsey & Company have released a briefing paper (9th March 2020) which provides some insight into possible global economic impact as well as some common steps that can/need to be taken in preparation for businesses being affected and the formation of a working group: link here.

For any additional queries or concerns, please contact your Honan client manager.


*Property/Office/Business Interruption

The advice in this paper is general in nature. While the utmost care has been taken in the preparation of this preliminary advice or opinion, you use it at your own risk.

If you have difficulty reading and/or understanding the cover provided in the policy(ies) that you have please contact your Client Manager.

Tougher penalties for Privacy Act breaches


Are you protected?

It has now been over a year since the amendments to the Privacy Act were introduced, requiring companies to voluntarily notify any breaches to the Office of the Australian Information Commissioner (OAIC).

In a swift follow-up from this at the end of March, Attorney-General, The Hon Christian Porter MP, announced the government’s intention to introduce even tougher penalties, as follows:

  • Penalties increased from $2.1m to $10m for serious or repeated breaches.
  • Providing the OAIC with the infringement notice powers, up to $63,000 for body corporates and $12,600 for individuals who fail to cooperate.
  • Introduce requirements for breaches to be addressed by third party audits, to ensure those directly affected are advised.
  • Require social media and online platforms to stop using or disclosing an individual’s personal information upon request.
  • Introductions of specific rules to protect the personal information of children and other vulnerable groups.

The Privacy Act amendments have forced Company Directors to become more digitally literate and cyber aware, however with the ever-changing nature of cyber risks, it is becoming increasingly difficult for Directors to keep up.


With these changes it is now more important than ever that every company manage their cyber risk through a robust insurance program, designed to protect not only your company’s balance sheet from significant first and third-party losses and fines, but also from the reputational damage that can be caused.

To manage your company’s Cyber Risk, contact Dan McCallum at or +61 499 799 131.


Honan Insurance Group Pty Ltd (Honan) holds an Australian Financial Services License 246749. Honan is not an insurance company, rather an insurance broker acting on behalf of our client. Where we act under a binder (as the insurer’s agent) we will notify you. This article contains general information only and is not advice. Before considering an insurance product you must read the Honan Financial Services Guide and relevant Product Disclosure Statement. 


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