Planning Major Capital Works? Don’t Be Caught Out

Strata News

As Committees plan for large maintenance projects or capital additions, it is critical for members to consider how these works interact with existing Strata Insurance policies covering buildings and other common property. Not consulting your Insurer before approving contracts for capital works (such as repainting the building, resurfacing pool areas or carparks, replacing balustrades or major plant and equipment) can leave the Body Corporate without adequate insurance responses if something goes wrong.

Here are our five checklist items to keep in mind for your next major project:


1. Understand strata policy coverage for the proposed cost of works

All major Strata Insurers have policy extensions where alterations, additions and renovations are covered by the strata policy, providing the following criteria are met:

  • The value of the proposed works does not exceed an amount between $100,000 and $500,000. This amount varies depending on your Insurer, so check your policy wording carefully. You can ask the Insurer to increase the permitted value of works on a case-by-case basis. 
  • You notify the Insurer well in advance before works commence and they agree in writing to cover the works. The Insurer will want to ensure the works do not present new or additional risks to those they are already covering.

As a general rule, a strata policy covers insured property damage to the new works (up to the policy limit). The coverage also provides Liability Cover for the Body Corporate but only for events directly caused by the negligence of the Body Corporate.  This coverage does not extend to the activities of contractors or their subcontractors.


2. Consult your Lawyer

It is good practice to have all capital works contracts checked by a Lawyer. Once the contract has been approved by the Lawyer, the contract should be provided to the Insurer for their approval.


3. Do not sign before you have agreement from your Insurer

Be wary of signing contracts that waive the Body Corporate’s (and therefore the Insurer’s) rights of subrogation*.   If a contractor or their subcontractor makes a mistake that causes property damage or personal injury, then you/your Insurer will want to claim against them/their Insurer. We have seen Bodies Corporate unintentionally put themselves in a position where they cannot make a claim.


4. Are the proposed works included on the Principal Contractor’s Contract Insurance policy?

It is essential for the Body Corporate to insist the Principal Contractor/Builder covers the agreed works for property damage and public liability.  They will usually do this via a Contract Works Insurance policy, otherwise known as a Construction or Contractor’s All Risk policy.  The Principal Contractor will have either an annual policy or a project-specific policy.  The Body Corporate should sight the current policy and provide it to their Lawyer for sign off.

The Body Corporate should be named as an Insured on the Principal Contractor’s Contract Insurance policy. If this is not possible, they should be noted as an additional insured at the very least.

If the Principal Contractor does not have a Contract Works policy in place, then it is likely all liability for property damage and personal injury will fall back onto the Body Corporate and you should do all you can to avoid this situation.


5. Only sign the final contract after it has been checked and agreed to by your Lawyer and Insurer



A final note

To find out more about reducing your risk exposure, feel free to reach out at any time.


Chris Glass

State Manager (QLD)




Learn more about the importance of knowing your commercial tenant’s site.


*the legal right to pursue a third party responsible for an incident/loss.

Insurance Catastrophe Declared Following Disastrous NSW Flood

Insurance Updates

In light of the 1 in 100 year storms and floods which continue to wreak havoc across NSW’s mid-north coast and Western Sydney regions, the Insurance Council of Australia (ICA) has today declared a catastrophe for large parts of the State. For insured residents, businesses and property owners in affected areas, this is good news – their claims will now be fast tracked.

Since the storms first hit last Thursday March 18, some NSW locations have seen close to 1000mm of rain, with others receiving 500mm. NSW Premier Gladys Berejiklian says around 18,000 people have so far been evacuated from their homes, and the NSW Government is appealing to the Australian Defence Force for clean up assistance across the State. At the time of writing, Queensland’s south-east is also being affected by extreme weather.

NSW major flooding is expected along the Hawkesbury River at Windsor and Sackville, the Macleay River at Kempsey and Smithtown, the Wollombi Brook at Bulga and the Colo River at Upper Colo and Putty Road.

Source: Bureau of Meteorology, March 22, 2021.




With residential insurance premiums in strata and real estate already increasing by more than 10% at the start of this year, March 2021 will be remembered for the NSW flood events starting on 18 March 2021 (and rain to continue to fall until approximately 25 March).

For context, the Townsville floods of 2019 was forecast to potentially cost insurers and reinsurers ~$1bn in claims. Based on the widespread impact of this month’s NSW flooding thus far, this March 2021 event is likely to see insurance claims exceeding those of Townsville.



The impact of uninsured buildings due to flooding in NSW is likely to be high. Many businesses are reporting that insurance cover for flood was not in place due to affordability issues. Instances such as these demonstrate how important it is for property owners to source quotes via a reputable insurance broker – brokers who rigorously audit their needs, ensure cover is adequate, and that the price of premiums are not considered in isolation. 



The current NSW floods will stretch NSW and Federal Government safety nets – their potential to ease the burden of increasing premiums post catastrophes will now be at capacity. The insurance industry is already dealing with increased insurance premiums in North Queensland (and Australia), cyclone areas and rural bushfire locations, specifically in alpine regions.



Honan Insurance Group is on hand to assist with NSW flood related claims and will be drawing on its national team to prioritise the lodgement. We’ll also be working hard to make affected buildings safe, if impacted by flooding and / or storm water damage. It is important that you check your insurance policy to review what you’re covered for. Some insurers have implemented an embargo on writing new insurance policies in NSW locations that are experiencing severe storm and flooding events.



At Honan, we’ve prepared an essential list of tips for responding to storms, floods, and optimising claims relating to flood or storm events

If you are insured via Honan Insurance Group, you can lodge a claim directly online, or via your Strata Manager or Real Estate / Property Manager.

  1. Contact insurance broker citing the date, time, cause and location of the loss
  2. Use your insurance policy number reference when making a claim
  3. Take photos of damage
  4. Obtain identification of all civil authorities involved. i.e. SES, Police, health department, building inspector, etc.
  5. Keep relevant damaged items for assessment or photo evidence
  6. Arrange for quotes
  7. Retain all invoices, time sheets etc, to ensure all costs are captured and attributable to the loss and to prevent an overlapping of normal costs with these expenditures
  8. If you are making a business insurance claim, have your ABN and GST information handy (if applicable).



Not all properties are exposed to the risk of flooding, however with the insights from the 2019 Townsville flooding and this month’s NSW flooding yet again highlights the need for clients to work closely with their broker to understand their risks, to secure adequate cover and purchase adequate flood insurance to protect their livelihood and assets.

Using a reputable insurance broker will give you access to flood mapping tools that can be used to determine if you are in a flood area with no risk, or in an area with the potential of low, medium or high risk flooding.

You can learn more about strata flood insurance – what it covers, and whether you need it, here.


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 



Discover the latest Corporate Insurance insights for FY21 Q2-Q3


How Well Do You Know Your Commercial Tenant’s Site?

Strata News

As a broker who negotiates with Insurers and Underwriters on behalf of Commercial Strata clients, it’s important to enter the conversation with a clear understanding of the property and the associated risks. This means we must obtain all necessary risk information, including but not limited to, Construction, Occupancy, Protection and Exposure (COPE), and a site survey wherever possible. This article outlines how commercial tenants’ risk profiles are assessed and how these factors can influence pricing for clients.  



Commercial Strata Insurance provides cover for commercial buildings under a strata title. These can include Government office buildings, industrial sites, and buildings with residential lots above and supermarkets or restaurants on ground levels.



Having a clear understanding of who the tenants are and the type of business they run helps Insurers accurately assess the property’s risk profile and appropriate pricing. As brokers, we like to know we have all the information before the Insurer receives the quote slip. This limits delays and back and forth from the Insurer. Here are some questions your broker may ask about the commercial property and tenants:

  • What equipment do they use on a day-to-day basis?
  • What fire safety equipment do they have on site?
  • Do they have safe work practices in place?
  • How often are certain items cleaned?
  • Do they have expanded polystyrene (EPS) on site?



If we are unable to obtain the information for each of the lots, as part of Honan’s service offering, we will arrange for risk engineering services to visit the property and ascertain:

  • The business name and activity.
  • Risk details at the property (construction materials, fire safety equipment, security on site.
  • If the property well maintained (e.g. are walkways clear? Is rubbish appropriately stored? Are there potential hazards?)
  • Additional tenant questions (depending on occupant’s business activities).



A well-maintained commercial property, with occupants with safe work practices in place, could be considered a “good risk” by Insurers. Poorly maintained properties, with cluttered units and high frequency or value of losses/claims can be seen less favourably by the Insurers. This can result in insurance being declined, special conditions or excesses being imposed, or higher premiums being charged. Identifying and taking action to reduce hazardous risks often improves the risk profile, enhancing the Insurer’s willingness to offer quotation for cover at a competitive rate.



Feel free to reach out to learn how we can assist in managing your strata risk profile.


Shelley Thompson

Client Manager


Clem Lwin

National Client Manager

Preventative Electrical Maintenance in Strata Complexes: What You Need to Know

Strata News

Fire damage claims represent a significant cost to strata insurers and a major inconvenience to owners and tenants. Faulty or poorly maintained electrical systems are often the cause of these incidents, with Fire and Rescue NSW attributing almost 40% of house fires each year to electrical issues. The high volume of ageing strata properties throughout Australia means the issue is set to continue if preventative actions are not taken. Regular preventative electrical maintenance helps reduce the risk of a serious claim and enhances the safety of all residents within your strata complex. Here are four simple actions you can take to reduce your risk and risk to others nearby.



Thermal Imaging or Thermographic Scanning is an effective way to identify load imbalances and hotspots (electrical parts that are damaged or worn will emit a higher level of heat than the surrounding area on a switchboard). More and more Strata Insurers now require old wiring to be inspected for compliance as well as regular Thermographic Scanning of switchboards.

The use of infra-red technology by a qualified electrician can identify abnormal temperatures within switchboard systems and rectify them in the early stages. Identifying issues before they escalate also prevents any downtime while damaged parts are replaced, which can sometimes take months to manufacture.



Common issues like overloaded electrical circuits, worn-out insulation on old wiring systems, the absence of grounding systems, and incorrectly modified wiring all increase the risk of fire and electrocution.

Often, properties constructed more than 50 years ago will exhibit some of these issues.  In some cases, the replacement of these systems is necessary (and often required depending on the type of wiring system). If the property is more than 50 years old, arrange an inspection by a qualified electrician who can assess these issues.



RCDs or Residual Current Devices are used to regulate the flow of electricity and automatically disconnect the flow when an imbalance is detected in the circuit. These systems are vital to avoid serious injury by electrocution.

In Australia, RCDs have only been mandatory on power circuits since 1991, so be sure to check the property is fitted with an approved device. Regular testing and tagging of RCDs by a qualified electrician can reveal whether the supply is tripping rapidly enough to avoid a potentially serious electrocution. Push button testing of your RCD is also required on a 6-monthly basis under Australian Standards. In Western Australia, the Department of Mines, Industry Regulation & Safety recommends this is done every 3 months.



Testing and Tagging involves the visual and electrical inspection of an appliance to ensure it is in safe and working order. This can only be carried out by suitably qualified technicians and should be done on a regular basis.

Faulty communal appliances such as dryers and washing machines can contribute to the risk of electrocution or fire, so it’s vital that regular testing and tagging of these appliances is conducted.



The above solutions are not exhaustive, and all electrical maintenance should be referred to a suitably qualified professional who can assist you in developing and carrying out a regular maintenance schedule.



We’re with you all the way

To learn more about how Honan can assist you in managing your Property and Strata risks, please reach out at any time.


Anthony Chitty

Client Executive



Discover more about Strata & Flood Insurance: What Does it Cover & Do You Need It?

Strata & Flood Insurance: What Does it Cover & Do You Need it?

Strata News

Of the many covers available in the strata insurance marketplace, flood insurance is one I find myself answering queries about almost every day, particularly after a day of heavy rain. With wild weather sweeping across the country in recent times (and the likelihood of future weather events occurring), it’s vitally important that strata managers and Owners’ Corporations understand their risk exposure to flood events, what flood cover involves, and ensuring the appropriate cover is in place.



Prior to 2012, each insurer in the market had their own definition of flood cover, which made it difficult for consumers to accurately compare and understand the different options available to them. In 2012, the Insurance Council of Australia introduced a statutory flood definition applicable to all domestic property insurance contracts (including Residential & Commercial Strata) to reduce consumer confusion about what constitutes a flood event.


The current definition of Flood is as follows:

The covering of normally dry land by water that has escaped or been released from the normal confines of: 

  • any lake, or any river, creek or other natural watercourse, whether or not altered or modified; or
  • any reservoir, canal, or dam.

Reference: Section 37B (2) (a) of the Insurance Contract Act 1984 (Cth). Insurance Council of Australia, 2012  

In simple terms, if a deluge of rain causes a river, lake, dam, or the like to overflow and the rising of this escaped water causes damage to the property, this would trigger the flood definition in the strata insurance policy, should the Owners’ Corporation have this cover in place.



Flood Insurance is usually provided as an extension to a standard strata insurance policy. Provided the Owners’ Corporation has this extension in place, the strata insurance policy will typically respond to loss or damage arising from the following:

  • Damage to the Building, inclusive of common areas and items falling within the definition of building within private lots (e.g., walls, cabinetry, installed fixtures, and fittings)
  • Damage to Common Contents
  • Loss of Rent & Temporary Accommodation.

Costs will be covered up to either the total sum insured for Building, Common Contents & Loss of Rent/Temporary Accommodation, or to the Flood Insurance Sub Limit noted on the policy schedule, whichever is the lower amount.



If you do not live near a body of water (as described in the flood definition above), then the chances of flood would be considered remote, and Flood Insurance may not be required. However, should the property be near a body of water, then Flood Insurance is likely to be needed. To find out more and understand the flood risk at your property, you can access the following resources:

  • Your local council will have flood mapping available for your area and be able to tell you if you are in a flood zone
  • Alternatively, you can refer to the Australian Flood Risk Information Panel
  • Contact Honan – we can utilise our internal resources or access our insurer partners’ flood mapping to help you understand your risk



Within the strata insurance industry, Flood Insurance is offered on a case-by-case basis. This means it is not automatically included in each policy. When a request for flood cover is received by an Insurer, they will review the flood risk (often down to the specific house number on a street and its proximity to bodies of water) and determine whether they will offer flood cover. If the Insurer offers flood cover, they may also charge an additional premium, impose an additional excess, or even impose a limit on the amount of flood cover they are willing to offer (usually lower than the overall sum insured). Not all insurers in the strata insurance market offer flood cover, so ensure you understand if your strata insurer can offer this extension of cover.



Honan, and our specialist team of brokers are available to answer any queries and assist with sourcing Flood Insurance. To learn how Honan can help, please contact your broker or reach out directly at any time. 


Joshua Boyd

Client Manager, Strata Insurance & Risk Solutions      

+61 439 391 289



Find out about underinsurance in the property market and how to limit your risk.

Don’t let your property dream become a nightmare – 4 tips to minimise buyer risk

Strata News

Buying a residential property can bring with it a whirlwind of nerves, frustration, excitement, and hopefully, ultimate joy. Often a complicated and drawn-out process, purchasing property also comes with a host of insurance-related implications, and ones well worth preparing for in advance. Having recently purchased a property of my own, I’ve collated 4 top tips for reducing risk and getting your insurance organised ahead of settlement.


1. ALWAYS START WITH A BUILDING INSPECTION – The real estate version of a test drive

You’ve fallen in love with a property and you’re considering making an offer. What’s next? Rather than making an immediate offer, wherever possible, engage a building and pest inspection service as early in sale negotiations as you can. A building inspector will review the property for evidence of existing structural damage, or evidence of conditions that may lead to structural damage in the future.

All qualified building inspectors must have a Professional Indemnity (PI) policy in place. This means that in the instance of finding structural damage in your new home in the future (that was not originally identified in the inspection report), you may be able to make a claim against your building inspector’s PI cover.



Once you’ve progressed to the point of signing a contract with the vendor, it’s time to think about home insurance. Depending on the location of your property, the timing of when you become responsible for any damage to the property will vary – always check this ahead of time. As a general rule however, you should purchase a home insurance policy as soon as you can after the contract is signed. Your lender may even require you to do this before your home loan becomes unconditional.



If the property is located within a Strata Plan, it is usually the responsibility of the Owner’s Corporation to take out a Strata Insurance policy to cover the building or common property that forms part of the Strata Plan. The Strata Insurance policy should be in place before the property is sold. If you’re unsure,  check with the vendor or contact the property’s Strata Manager.



If your new property is an investment and you plan to rent it out, you should consider Landlord Insurance. Landlord Insurance covers your property as per a home insurance policy in addition to losses that may arise through the actions of your tenant/s (e.g. theft, loss of rent if the property becomes uninhabitable or malicious activity).


We’re with you all the way

To learn more about how Honan can assist you in managing your Property and Strata risks, please reach out at any time.


Matthew Henderson

Operations Manager – Underwriting Facilities & Strata



Find out about underinsurance in the property market and how to limit your risk.

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.

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