Insurance Updates
By Kieran Drum- National Head of Strata
Matthew Henderson – Operations Manager: Underwriting Facilities & Strata




The Real Estate sector has been hit hard by an increase in frequency and severity of cybercrime incidents. Having moved much of their interactions and processing online over the last 18 months, real estate agents and property managers are especially vulnerable to social engineering attacks. Social engineering is a general term referring to an attack where the fraudster successfully impersonates a trusted employee, vendor, supplier, customer, or even a CEO or CFO; manipulating the victim into disclosing security details and sensitive information. These attacks often come in the form of phishing emails. Sadly, Honan clients are by no means immune to such threats. In the last quarter alone, we have seen multiple successful cyber attacks on our clients. Fortunately, in each instance, an appropriate level of cover was in place via a bespoke cyber policy.

While many organisations believe they can rely on extensions to Professional Indemnity and Management Liability policies to provide adequate cover in the event of a cyber incident claim, this is not the case. To ensure their level of insurance is truly fit for purpose, real estate agents and property managers are strongly encouraged to review their internal cyber security strategies with their broker.



On September 22, 2021a 5.9 magnitude earthquake struck Victoria, with tremors felt across the state and as far away as Newcastle in NSW. While there were no immediate reports of serious injury or death, damage included collapsed walls, shattered windows, and cracked roadsEarly estimates place the total cost of damage at $150 million, with almost 10,000 claims. At the time of publication (October 14, 2021), the earthquake has not been declared a catastrophe by the Insurance Council of Australia (ICA)Head here to find out more about how a catastrophe is defined and what this means. If you believe you have a claim, please contact your broker directly. 



With heavy rainfall, hail, and tornadoes marking a busy start to the Australian storm season, the Bureau of Meteorology has predicted a 50% chance that La Niña conditions will return this spring (double the normal likelihood). As a result, there is a higher probability of damaging events taking place such as flooding. Clients are encouraged to prepare early (now) bensuring their level of cover is sufficient for the season ahead. If in doubt, please reach out to your broker to discuss.  



Global supply chain interruptions due (in part) to COVID-19, along with Australia’s Black Summer bushfires in early 2020 have contributed to building material shortages; a trend which is expected to continue over the next 12 months. Materials most affected include steel, timber, roofing products, PVC, and electrical products. In addition, the prices of both containers and dry bulk shipping are increasing, with serious shortages in haulage between Australia and other countries.

These shortages, together with pricing increases, have driven the cost of insurance repairs and replacements upwards. Unknowingly, many property owners may no longer have adequate insurance in place to reflect such increases in costs to repairs/rebuilds. Two simple insurance solutions can assist clients with this: 1) updated property valuations, and 2) those in strata buildings can review the Catastrophe Insurance percentage of the building sum insured 



Market Update: Q1 FY22




Strata News

At Honan, we often receive queries from lot owners about what their strata insurance policy covers. For example: is water damage to the carpet in an apartment covered by the building insurance? Can a tenant’s damage to the front door of a property be claimed on the strata policy? Is a cracked glass cooktop covered by the Body Corporate policy? To help avoid duplicating insurance cover and identify risk exposures, this article looks at building and contents items for residential properties and outlines who is responsible for what – the Body Corporate, landlord/lot owner, or tenant.



The insurance that a Body Corporation takes out to cover the building, common property, and common area contents of the strata plan. In Australia, the Body Corporation must hold strata insurance that complies with the relevant state or territory legislative requirements.


As the old saying goes, if you turn the building upside down, what falls out is the contents, and what stays in is considered the building. While this is a fairly good rule of thumb, it is important to check the meaning of building as defined in the relevant strata legislation depending on where your building is situated. *See the relevant Act for your location at the end of this article.  For example, in Victoria The Owners Corporations Act 2006 states a building includes—

(a) a structure and part of a building or a structure; and

(b) walls, out-buildings, service installations and other appurtenances of a building; and

(c) a boat or a pontoon that is permanently moored or fixed to land.



Strata insurance typically covers the building, common property, and common area contents in the event of sudden/unforeseen accidental loss or damage.  In every case, coverage will depend on the cause of damage and if it is classed as an insurable event. A couple of examples are as follows:

  • Storm damage
  • Fire
  • Resultant water damage from a burst pipe/apparatus
  • Impact damage
  • Vandalism
  • Malicious damage
  • Theft

Each policy has exclusions, and as such, it is important to read and understand your insurer’s Policy Wording and Product Disclosure Statement. Some general exclusions across the market are (but are not limited to): wear & tear, corrosion, faulty workmanship, defect, and/or maintenance-related. Certain strata policies include an extension of cover for loss of rent/temporary accommodation to assist owners if their lot becomes inhabitable during an insurable event.



Strata insurance protects the Corporation against any third-party claims for personal injury and property damage.  Claims that arise inside the lot relating to damage to the contents and or liability are the property owner and tenants’ responsibility.

The lot owner is responsible for ensuring the lot is well maintained and safe for the tenant and their guests. Examples of claims arising from negligence by the lot owner include failing to repair a piece of carpet that has come loose resulting in the tenant or their guest sustaining an injury, and damage to a step or balustrade on the staircase, resulting in the tenant or their guest sustaining an injury. A tenant can be held responsible for failing to maintain a safe environment for anyone who may come onto the lot, such as failing to clean up a spill resulting in someone onsite slipping and injuring themselves. In most instances, the lot owner and tenant will both be brought into the claim until negligence is determined.

If you are found to be at fault and you do not have public liability insurance, you are responsible for the cost of defending the claim, damages awarded to the claimant, and the claimant’s legal costs.



How the lot is occupied will determine the type of contents insurance that best suits your needs. If you own and occupy the lot, a Householders Contents Only policy will be relevant to you, whereas if the lot is leased to tenants, a Landlords’ policy would be appropriate.   As a landlord, contents insurance covers your public liability inside the lot as well as the cost of repairing or replacing your possessions and furnishings such as carpets, blinds, whitegoods/ appliances not wired in.  The cover does not extend to the personal property of the tenant or their guests. If you live in a rental property, you can take out a Householder’s Contents policy.



Landlords not only need to consider how they protect their premises but also the income they receive from their tenants.  Landlords’ insurance provides the option to extend cover for Rental Loss.  The two types of covers are:

1. LOSS OF RENT is where an insured event occurs (e.g., burst pipe) and damage to the premises has rendered it uninhabitable.  This section will cover the lost rent until repairs are completed. 

2. RENT DEFAULT is where the tenant fails to pay rent in accordance with a rental agreement.  A claim can only be triggered once the Insured has taken all reasonable steps legally available, under the Residential Tenancies Act or other relevant legislation, to remedy non-payment and evict the tenant. 

When selecting Rent Default, it is important to refer to the policy conditions relating to the cover.  Most policies have a condition that requires a signed long-term lease agreement in place with the tenant and no rental arrears at the policy’s inception.  Undisclosed details which may increase the risk for the insurer may impact coverage. Failure to advise may result in the insurer refusing cover in the event of a claim.




We often receive questions about whether floating floors and air conditioning units are covered by strata or contents insurance.

Floating floors are generally considered a contents item. However, some strata insurers offer floating floors within the unit as optional coverage on the strata policy. For most insurers, floating floors are defined as laminated, veneered, or similar type flooring not fastened to the sub-floor but held in position by its own weight with or without skirting at perimeter walls.

Air conditioning units are classified on a case-by-case basis. Typically, if the air conditioning unit is a permanent fixture (i.e., ducted air conditioning), it is considered part of the building and would fall under the strata policy. However, In Queensland, air conditioning (fixed or mobile) is excluded from the strata policy. It is important to check the relevant Product Disclosure Statement (PDS) and Policy Wording to ensure that you are adequately covered. If you are unsure, we are happy to review your policy.



While we have taken care to ensure the information above is true and correct at the time of publication, changes in circumstances and legislation after the displayed date may impact its accuracy.   

Feel free to reach out to your local Honan Strata & Landlords team for more information.


Hannah Tormey

Client Manager


Natalie Bruce

Customer Service Team lead


* The definition of a ‘building’ varies depending on the location. See below for the definition in your state or territory:

SA – The Strata Titles Act 1988

QLD Body Corporate and Community Management Act 1997

TAS – Strata Titles Act 1998

VIC – The Owners Corporations Act 2006

WA – Strata Titles Act 1985

ACT – Unit Titles (Management) Act 2011

NT – Unit Title Schemes Act 2017



Strata News

In the wake of three earthquakes across Victoria’s north-east on September 22, 2021, property damage in Melbourne and regional Victoria has added an additional level of complexity following the State’s two-week construction shut down announced on 21 September. Under the shut down, any projects that are not considered an emergency or essential (specifically, all unoccupied lots) will be placed on hold for two weeks*.

*If you believe any of your jobs fall within this emergency/essential category or have any specific questions on a project, please feel free to reach out to Kieran Drum or Tracy Woolley directly (details below).



In terms of responding to emergencies, such as damage caused by the September 22 earthquake, our building and repairs partners are ready to respond. You can either contact your Honan Insurance broker to arrange this or contact a make-safe partner (details below). Regardless, please be sure to contact your Honan Insurance broker or the Honan Helpdesk.

Most policies for Commercial, Residential, and Strata buildings will specify that Damage must occur within 72 hours of the earthquake.



For claims relating to other damage caused by the earthquake, please check your policy for information about the excess, as an additional excess may be applied for an earthquake. Alternatively, please speak with your Honan claims advocate or Honan Insurance broker.


Standard Earthquake Excesses for Strata properties (policies may vary so please check your schedule and PDS wording): 


**We have reached out to key insurers and underwriters for confirmation around their residential earthquake excesses, but Policy Wordings for both simply refer to what is noted on the policy schedule.



Honan was advised that due to the earthquake, some insurers implemented an embargo for all of Victoria effective September 22, 2021. As of September 23, 2021, Honan has been advised that the temporary embargo has been lifted. If you continue to have difficulty accessing insurance cover for risks/policies incepting due to the earthquake, please reach out to your Honan Insurance broker or the Honan Helpdesk. Note that the terminology of the temporary “embargo” related to quotes and new business to selected insurer(s) and underwriting agencies on the day of the earthquake (22 September 2021).



Make Safe Partners & Emergency Repairs

Johns Lyng Group

1300 736 000



Crawford’s Contractor Connection

1300 729 239



Honan Claims Helpdesk:

E  Ph: 03 9947 4333

Tracy Woolley, VIC Claims Team Leader

Maja Vujinovic, Head of Claims –

Kieran Drum, Head of Strata –


Reducing Your Insurance Premium: Commercial Property & Strata

Strata News

Many industries and sectors are feeling the force of the hardening insurance market as premiums continue to rise, with both privately owned and strata registered commercial and industrial properties among the most impacted. This article explains what is fuelling the premium increases, how different risks are assessed/priced, and steps to make your risk profile more appealing to insurers.



First, it is important to understand the market forces at play. The lower premiums collected in the prior soft market (where insurance was relatively cheap and plentiful) means insurers have suffered underwriting losses where claims paid are similar to or higher than the premium collected.

Making matters worse, property losses have continued to grow, as evidenced by recent flood, bushfire, hail/storm, and cyclone losses. With such large catastrophic losses across the globe, the cost of purchasing reinsurance (insurance for insurers) rises. In turn, insurers raise their premium rates and become more selective in their underwriting guidelines to regain profitability.

Right now, commercial property premium increases are trending between 15-20% for commercial strata, between 5-10% for non-strata commercial buildings, and increases can be upwards of 20% for industrial buildings. Changes in risk information, hazard or high-risk occupants, and poor claims history can push these rates even higher.



The hardening market is driving insurance rate increases and restricting appetite to underwrite commercial/industrial risks.  Many insurers who could previously write high-risk commercial and industrial buildings have experienced a significant influx of claims. As a result, they have adopted a more conservative approach and are re-evaluating their risk appetite/rates to reduce their overall exposure. Consequently, underwriters are either not offering renewal or applying large rate increases and additional excesses/deductibles.

Tenants and Occupiers are a major factor in insurers’ risk assessments, in combination with the construction material and fire safety measures in place at the property (see Figure 1). COVID-19 has contributed to a surge in the volume of premises left vacant and unoccupied for an extended period. As shown in figure 1, underwriters view unoccupied lots as more likely to incur malicious damage and theft.

There are now fewer Insurers in the high hazard commercial property market and those remaining have narrower risk appetites. Over the last five years, three strata insurers and at least three specialist property insurers have exited or significantly reduced their exposure to commercial property risks. Reduced competition limits the “capacity” or amount of risk each insurer is willing to hold in any one risk or location. This is particularly evident for hard-to-place risks, such as properties in alpine regions, where there are far fewer insurers prepared to offer terms. Further, if the sum insured is above approximately $5 million, those same insurers may not be able to write 100% of that risk. In turn, the request for a quote may be declined, or sometimes, multiple underwriting agencies will need to insure a percentage of the risk.



The chart below shows how risks are typically viewed by insurers, with the greater risks most likely to attract higher premiums. 

Figure 1:





Insurers appreciate owners that are proactive in their approach to risk mitigation. It instills confidence that the property owner or manager is overseeing and limiting risk effectively. Here are our tips on how to make your property more attractive to insurers:

  • Property maintenance: Make sure a maintenance plan is in place and always adhered to. It is prudent to have an annual preventative maintenance budget for the property.  This allows urgent repairs and proactive maintenance to be carried out. A professional property manager can assist by overseeing the maintenance fund and engaging with industry experts to maintain the property.


  • Fire safety upgrades: Ensuring you are meeting your mandatory council fire safety obligations is a must, however, going beyond the minimum requirements is encouraged by insurers. If the property is leased, ensure the tenants have adopted best fire and safety practices for their industry.


  • Engage a risk engineer/surveyor: A professional risk engineer can identify hazards and provide recommendations to improve the property’s risk profile. They provide feedback on fire protection, storage suggestions, maintenance, and overall best practice to minimise risk and liabilities.


  • Keep your broker updated: Inform your broker about any enhancements or steps taken to reduce risk at the property. This can be done at any stage but will be most beneficial leading into renewal. This information will assist the broker in their negotiations of terms with both the holding underwriter and alternate markets.




Chris Glass

State Manager – QLD


Teighan Carr

Client Manager




Strata Public Liability Cover vs Strata Legal Defence Expenses Cover | How do they respond in the event of a claim?

Strata News

Owners Corporations and Strata Managers are generally aware that a strata policy includes mandatory Public Liability (PL) Cover, and that Legal Defence Expenses (LDE) Cover is a separate, optional cover. However, there is often confusion about which policy applies when an Owners Corporation is served with a letter of demand or other legal notice(s).

In this article, we address the key differences between PL Cover and LDE Cover, explain how insurers generally assess claims coverage against both, and share some helpful tips on managing litigated claims.



PL Cover, also known as General Liability Cover, refers to claims made against an insured Owners Corporation by a third party that is seeking compensation for either property damage or personal injury. This third-party claimant can be anyone other than the Owners Corporation, including lot owners, tenants, and even employees/contractors working for the Owners Corporation.

Typical PL claims may include claims from occupants in a residential strata building seeking compensation for personal injury or damage to their personal property, accompanied by allegations that the Owners Corporation is responsible for their loss.

LDE Cover responds to most other types of litigation and legal actions taken against the Owners Corporation and relates to the management of Owners Corporation affairs. This can include ownership of common property, disputes falling under consumer protection legislation, and disputes between the Owners Corporation and employees, such as caretakers and building managers.



Owners Corporations must notify their insurers as soon as they are aware of legal threats against them, even if formal demands or formal legal actions are yet to be made.



PL Cover responds to a claim on an occurrence basis. This means the date when the relevant incident occurred is taken as the appropriate Date of Loss. This date determines which period of insurance the incident falls under. An insurer may sometimes claim prejudice and limit their liability towards the insured’s loss/costs in the event of late notification.

LDE Cover responds to a claim on a claims-made basis. This means that the date when an insured Owners Corporation receives summons or notice of the third party’s intention to initiate legal proceedings will be taken as the appropriate Date of Loss. However, if it is found the Owners Corporation was made aware of such intention at an earlier date, then that earlier date may be considered the correct Date of Loss. Late notification can have significant negative consequences in terms of cover under LDE.



Under both covers, an insurer can pay up to the policy limit available to an insured Owners Corporation. The policy limit of each cover is specified on the Certificate of Currency and Policy Schedule.

Under PL Cover, insurers will pay any compensation that the insured is legally required to pay, including settlement awards, court-ordered damages, and costs. If a matter is litigated, insurers will also pay for legal defence costs and court-ordered costs.

Under LDE Cover, as suggested by the term itself, insurers will only pay for legal defence expenses incurred and reasonable investigation/expert fees incurred with the insurer’s written consent. However, insurers will not pay for any compensation ordered by a court/tribunal or negotiated between parties.



PL Cover is generally triggered when the Owners Corporation receives a demand from the third-party claimant including the reasons why they are holding the Owners Corporation responsible for compensation for personal injury or property damage. Generally, insurers will not take active management until a demand against the Owners Corporation is received.

Once insurers have granted indemnity to the Owners Corporation under PL Cover, insurers will take control of the matter and correspond with the third-party claimant directly. The insurers will examine whether the Owners Corporation can be held legally responsible for the claimed loss. If a matter is complex, insurers may appoint factual investigators, liability investigators, or even lawyers with whom the Owners Corporation is required to co-operate and provide any relevant information as requested.

The information an Owners Corporation is required to provide is different when a claim is considered under LDE Cover. The Owners Corporation can appoint its own lawyers with the insurer’s written consent. To determine policy coverage, insurers will usually require the Owners Corporation to obtain from its lawyers both of the following:

  • An estimate as to total legal costs; and
  • Defence strategy and advice as to defence prospects.

If it is not economically viable to defend a claim OR the prospect of successful defence is low, insurers will likely deny coverage under LDE Cover.



  • Neither PL Cover nor LDE Cover will respond to a claim made by the Owners Corporation against others. However, if a third party makes a Counter Claim in a matter brought by the Owners Corporation, there is a possibility that the cost to defend the Counter Claim may be covered under the PL Cover or LDE Cover.                                                                                                                                      
  • It is important to understand what information insurers will require to consider coverage in the event of a PL or LDE claim. Gathering relevant information as quickly as possible can assist insurers in deciding on a coverage position faster. For example, insurers will usually request the following information from the Owners Corporation in the event of a PL Claim:
    • Records of a past similar incident, if relevant
    • CCTV footage, if available
    • Maintenance programs and records, depending on the issue
    • Proof of mitigation works undertaken, if relevant.
  • Insurers are mindful of incurring legal costs under PL Cover and LDE Cover. For PL claims, insurers will likely insist on appointing their preferred lawyers. For LDE claims, although an Owners Corporation can appoint its own lawyers, written consent must be obtained from the insurers beforehand.




Our Strata Claims Team is well equipped to assist you with enquiries and claims under PL and LDE Cover. We can also support you in obtaining relevant information to progress claims quickly.

Feel free to reach out at any time.


Annie Wang

Associate Claims Executive



See our FAQs and Top Tips on Strata PL Claims.  



Strata News

By Kieran Drum- National Head of Strata
Matthew Henderson – Operations Manager: Underwriting Facilities & Strata




In May, the Government announced its intention to establish a reinsurance pool for cyclones and associated flood damage, effective July 1, 2022. Backed by a $10 billion Government guarantee, the pool would cover strata, residential, and small business property insurance policies in Northern Australia.

In response to the announcement, insurers and brokers are advocating that a reinsurance pool is unlikely to significantly reduce premiums overall and that the Government should instead be reviewing Stamp Duty and GST charged on insurance in conjunction with the development of a reinsurance pool.



We have seen a significant influx of broker-distributed Rent Default product options available to Honan. We expect insurers to re-enter the Landlords’ insurance market over the next 12 months and competition to drive lower premiums in 2022.

The ending of the Evictions Moratorium on March 28, 2021, has not caused major impacts to Landlords’ Rent Default coverage. Real estate agents are expected to remain vigilant in their approach towards tenants’ rental payments, but there is cautious optimism in the real estate market that the worst may have passed. Insurers are slowly returning to the market with rent default products in one form or another.



Many policies are seeing movement in standard excesses from $500 up to $1,000 (with an option to pay extra for an excess buydown). The cycle of excess increases in Strata has been a slow journey – from nil over a decade ago, to $300 followed by a slow increase towards $500, and now $1,000.


We continue to see higher water damage excesses being imposed on buildings with recent water damage claims or reported defects. The excess increases from $500 towards $1000 are intended to reduce the large proportion of small attritional claims lodged for minor repairs or plumbing callout works which often cost $500 – $1,000.



The end of the financial year is often a time for the insurance market to re-evaluate its position and exposure to risk. Reinsurers and other securities have been more reticent when offering capacity in the Australian Professional Indemnity market for Real Estate Agents. This has been largely driven by the increased occurrence and severity of bodily injury claims relating to property management services and litigation becoming more prevalent in Australia.




COVID restrictions and lockdowns have taken a significant toll on the retail and commercial sectors, resulting in vacant lots, particularly across urban centres. It is important to remember that if a lot is vacant for 90 consecutive days, insurers must be notified. When a lot becomes vacant, property managers and owners should consider reducing their risk exposures (e.g. installing alarms and security cameras where appropriate).



On December 1 this year, the minimum public liability cover required to be held by an Owners Corporation within Victoria is increasing to $20m. While there are differing views amongst insurers as to how this will happen from a logistical point of view, Owners’ Corporations with less than $20m Public Liability Cover should be mindful of the upcoming changes.

As covered in last quarter’s HoneIn, extensive regulatory changes were enacted by the Victorian Government in March. If you are a landlord and have not already considered the new regulations, we encourage you to do so.



The Strata insurance market continues to harden at varied rates, depending on the sector. Residential Strata premiums are increasing at around 10% nationally and we expect this to continue. Commercial property premium increases are trending higher at 15% – 20% for commercial strata, 5% – 10% for non-strata commercial buildings, and upwards of 30% for industrial buildings with high-hazard activities.

For commercial tenancies, insurers continue to be wary of “high risk” occupations such as tattoo parlours, dry cleaners, recyclers, and restaurants with wok cooking or deep fat fryers over 20 litres.



Discover more market updates from this edition of HoneIn.

Asbestos & Property Insurance: Critical Information for Strata Managers

Strata News

Popular for its resistance to fire and its insulation properties, asbestos was widely used in a range of building products such as roofing, flat and corrugated sheeting, cement pipes, and floor tiles until the late 1980s. If products containing asbestos are incorrectly handled, the fibres can be released into the air, become trapped deep in the lungs, and cause significant health problems over time.

An Owners’ Corporation has a duty of care to understand the hazards present at their properties to prevent harm to visitors, tenants, workers, and contractors. This article explains why disclosure of asbestos to insurers is essential and how you can understand and manage the associated risks. 



A total ban on asbestos came into effect in Australia on 31 December 2003. While it is unlikely that properties built after 1990 will contain the material, completion of an asbestos report will confirm either way. Strata Managers can request these reports on behalf of the Owners’ Corporation if they give the necessary permission. Obtaining an asbestos report demonstrates the Owners’ Corporation has taken prudent steps in identifying potential hazards on the property. This is very important from an insurance perspective because identifying and reporting issues pertaining to properties is part of your duty of disclosure as a Strata Manager and owners’ corporation.


While it is not a requirement for all properties to have an asbestos report, it is often raised by Strata Managers at AGMs. If an event that gives rise to an insurance claim occurs in a building containing asbestos, it will often be significantly more expensive to remedy because of the added cost of asbestos removal by licensed operators. Due to the duty of disclosure, there may be some complications with the claim being paid by the insurer. If the claim is totally or partially denied then there could be a liability that sits with the Committee, especially if the Owners’ Corporation has voted against an asbestos report at an AGM.



The report will contain important details, including the location of the suspected asbestos, its condition, and risk rating. The report will also outline actions to be taken, requirements, and recommendations.

If items containing asbestos are in good condition and the material is bonded/non-friable, the actions will likely be to leave it in place and not disturb it. If the items are considered high risk and the material is friable or easily crumbled, the action items will likely be to remove, replace and restrict access. These items can be overlooked when the report is not read carefully.

The report will also include a scheduled review date. It is important to schedule a regular follow-up inspection and report to ensure the condition of the asbestos (which can be affected by factors such as the weather) is monitored.



If Asbestos has been located, an Asbestos Management Plan will be put in place by a licensed contractor who specialises in asbestos management. An Asbestos Management Plan & Asbestos Register is used to identify and document asbestos risks and the safety procedures that must be conducted to minimise exposure. This is kept on-site in a document box. If any renovations, building maintenance, or demolition works involving asbestos-containing materials (ACM) are planned, the persons involved must review the plan to ensure compliance with the Work Health and Safety Act Regulation 2011 and Codes of Practice.



When seeking insurance quotes for a property, your broker needs to know as much information as possible. This includes the disclosure of asbestos. If the presence of asbestos is not disclosed to the insurer and a claim relating to asbestos later arises, it may exceed the percentage of asbestos they can underwrite. Consequently, the insurer may not pay a claim because the asbestos risk would not have been underwritten if this information had been known.




We have access to insurers who will provide insurance for properties with asbestos. Maintaining an updated register and knowing the condition of the asbestos will be key in the insurer agreeing to provide coverage. To find out more, feel free to reach out at any time.


Shelley Thompson

Client Manager

Catastrophe Insurance for Strata Corporations: Your Questions Answered

Strata News

At Honan, we often receive queries from strata management and owners’ corporations wondering if they have cover for catastrophic events when Catastrophe Cover has not been selected in their insurance policy. It is a common misconception that cover will not be provided if an event is declared a catastrophe and this section of cover has not been selected. In this article, we break down all things Catastrophe Cover, including the classification of a ‘catastrophe’, how catastrophe insurance works, and how coverage can be secured.



While it is common to refer to large weather events as ‘catastrophes’, the formal insurance definition of a catastrophic event is:

“an Event which is sudden and widespread and which causes substantial damage to property over a large area, and as a result of which the Insurance Council of Australia issues a catastrophe code”.

In simple terms, if the Insurance Council of Australia (ICA) does not declare a specific event a catastrophe, then it is not classed as one, regardless of the extent and reach of the damage caused.



The Insurance Council of Australia (ICA) will typically declare a catastrophe after an influx of claims resulting from an extreme weather event or a natural disaster such as a storm, hail, flood, bushfire, cyclone, etc. Earlier this year, the ICA declared a catastrophe code (CAT202) for the devastating storms and floods in NSW and QLD. Other examples include the recent WA bushfires, North QLD cyclones, and even certain hailstorms that cause damage to motor vehicles across entire metropolitan areas.



Property damage from a catastrophic event would usually fall under the Insured Property section of a policy, subject to the terms, conditions, and exclusions. However, Catastrophe Cover provides an additional level of protection in the event the sum insured is insufficient. This is often due to the increased costs associated with the higher demand for supplies and services in the area.

If in place, Catastrophe Cover is only activated when the building sum insured is exhausted, and a catastrophe is formally declared by the ICA. Catastrophe Cover is an opt-in cover that will provide either a 15% or 30% increase (dependent on the level of cover selected) in the sums insured for the following covers:

  • building sum insured
  • an extended period of cover for Loss of Rent
  • an extended period of cover and escalation in the cost of Temporary Accommodation
  • removal and storage of undamaged insured property
  • cost of evacuation for resident lot owners.

While catastrophe cover will assist during a catastrophic event (if selected), it is important to ensure your building sum insured is still adequate. The building sum insured should always be sufficient to allow for the building to be reinstated to its condition prior to the insured event including all associated costs (e.g., the value of demolition work, removal of debris, surveying, engineering, and architectural fees, etc.). A professional valuation of all insured property should be obtained by a certified valuer where possible.



This optional cover is beneficial for Insureds living in natural disaster-prone areas (i.e., areas prone to bushfires, cyclones, and floods where the building sum insured is more likely to be exhausted). If you are unsure about your exposure to these risks, some useful resources to gain a better understanding are as follows:

  • Your local council will have mapping available to help you identify potential risks such as floods, bushfires, etc in your area.
  • Your most recent property valuation may provide some commentary about the risks nearby.
  • Contact Honan – we can utilise our internal resources or access our insurer partners’ flood mapping to help you understand your risk.



As noted above, Catastrophe Cover is in addition to your building sum insured and responds when your property is deemed a total loss from a declared catastrophic event. The catastrophe sum insured is calculated as a percentage of your building sum insured, usually 15% or 30%. This cover can be added to your policy for an additional premium.   Your Honan Broker will be able to provide you with a quote.



At Honan, we are with you all the way. Feel free to reach out to learn how your owners’ corporation may be impacted by a catastrophic event and what this means for you.


Hannah Tormey

Service Executive – Strata Insurance & Risk Solutions

+61 3 9947 4311



Find out about emergency accommodation and loss of rent in strata properties.


UPDATE: Victoria’s residential rental laws have changed | What landlords & tenants need to know

Insurance Updates

On March 29th, 2021, the Victorian Government enacted a raft of new rental regulations, making over 130 changes to the Residential Tenancies Act, 1997. The changes are intended to set minimum standards for the condition of rental properties and enhance the rights of tenants.

The changes are designed to take in the entire length of the tenant/landlord relationship, from the first inspection to the return of the bond after the end of the tenancy. Here is an overview of the information you need to know – at every stage.



The practice of inviting rental bids or soliciting higher offers than the advertised price is now forbidden in Victoria. This means the advertised price and the ‘going rate’ are the same. In addition, 14 minimum standards have been introduced, including the requirements for a:

  • working toilet and door locks
  • three-star shower head
  • vermin-proof rubbish bin
  • working stove
  • food preparation area and sink in the kitchen.

Landlords must also ensure tenancies:

  • are free of mould
  • have appropriate lighting and ventilation
  • are energy efficient
  • have appropriate gas and electrical safety checks conducted (for tenancies starting on or after 29th March 2021).



Before these changes, some landlords and property managers refused to permit minor modifications to rental properties by tenants. Under the new changes, tenants can make modifications unless there is a “reasonable reason” to prevent them from:

  • installing picture hooks, shelves, and child-safety devices without receiving consent from their landlords
  • painting the premises, provided the property is returned to the previous colour at the end of the tenancy
  • making changes to outdoor areas by adding a herb garden
  • installing additional locks, including on the letterbox
  • replacing the doorbell with a wireless camera model



There has been a major change to the accepted valid reasons for eviction. Previously, a landlord could state “no specific reason” when evicting a tenant. This is no longer the case.  Acceptable reasons for eviction now include selling the property, the owner moving back into the property, and building demolition for development.



To limit drawn-out disputes over bond returns, a departing tenant can make an application to the Rental Tenancies Bond Authority upon leaving their property. A landlord only has 14 days in which to make a claim on that bond for compensation, or the bond will be repaid in full to the tenant.



Landlords in Victoria need to familiarise themselves with the changes, particularly as they may need to make upgrades to their properties. These upgrades should also be considered when budgeting for the maintenance of the properties. A full explanation of the changes to the Victorian rental laws is available here.




Matthew Henderson

Operations Manager – Underwriting Facilities & Strata



Find out about Emergency Accommodation & Loss of Rent



Emergency Accommodation & Loss of Rent: Understanding Strata’s ‘Additional & Special Benefits’

Strata News

Compensation for temporary accommodation and loss of rent are two key special benefits offered by most leading strata policies, however, they are both often misunderstood by unit owners and strata managers.

To assist owners and managers in making more informed decisions around temporary accommodation and loss of rent, this article steps through the key features, benefits, and limitations attached to each type of cover.



Strata insurance is a legal requirement for body corporates across Australia, with each State’s legislation stipulating a minimum level of reinstatement and replacement insurance for the building and common contents.

In recognition of the broad risks that body corporates and unit owners are exposed to, most leading strata insurers offer ‘broad form’ accidental damage cover’, which provides cover for any sudden and accidental damage to insured property (subject to the policy terms, conditions, and exclusions).

In addition to the above, such policies also offer specific additional and special benefits, including those which can be accessed by unit owners in a strata plan. Temporary accommodation and loss of rent are among the most significant of these benefits, triggered when a unit’s occupant(s) are displaced following a claim event.



If a unit is owner-occupied, the owner may be able to access temporary accommodation in the event of a claim involving damage to their property.

If the damage results in the unit being unfit for occupation, the insurer will cover the insured’s temporary accommodation costs until the insured repairs are completed. An insurer will generally appoint an assessor to inspect the unit and confirm it is ‘unfit for occupation’, and following such confirmation, will:

  • review the unit owner’s selected temporary accommodation and authorise it for the relevant period (until repairs are completed); or
  • arrange temporary accommodation through one of their preferred providers such as Quest Apartment Hotels.

Strata policies may also have an ‘emergency accommodation’ allowance, which allows affected owners to access suitable accommodation for a few days following extensive damage until their claim can be assessed and entitlements confirmed.



If a damaged unit is tenanted, the insurers will appoint an assessor to determine whether a unit is unfit for occupation as a result of the damage. However, strata insurers will not be involved in a tenant’s temporary accommodation arrangements.

Instead, a unit owner will compensate their tenant for the period the unit remains unfit for occupation (until repairs are completed), and the insurers will reimburse the owner for their loss of rental income over this period.



The following facts are important to keep in mind when a claim involving either temporary accommodation or loss of rent is afoot:

  • Cover for temporary accommodation and loss of rent is generally provided on a costs-incurred basis, meaning that the costs need to be incurred for insurers to provide reimbursement.
  • Cover for temporary accommodation or loss of rent is subject to the claim itself being accepted under the policy, and the unit being considered unfit for occupation following a loss event.
  • The classification of a unit as ‘unfit for occupation’ is determined on a case-by-case basis, however, a unit is generally assessed as unfit for occupation/uninhabitable if:
  • There is no access to essential areas such as bedrooms, bathrooms, or kitchens
  • There is no access to essential services such as water or electricity
  • Required rectification works will prevent reasonable access or occupancy
  • There are health and safety risks for occupants if they remain in the unit
  • Reasonable access to the unit is not possible due to the damage.


  • Generally, insurers will look at whether the conditions cross over the threshold of inconvenience to impacting the occupant’s ability to reasonably access or reside in the property.


  • If the unit is not considered ‘unfit for occupation’ as a result of the loss but will be ‘unfit for occupation’ when insured repairs are taking place, temporary accommodation or loss of rent will be available for the duration of repairs (only).


  • An owner-occupier is entitled to comparable (like for like) temporary accommodation, and they will also be covered for the cost of removing their contents/possessions if this is required to facilitate repairs. This is usually arranged by insurers through an associated policy benefit which covers the cost of moving, storing, and returning such items (and insuring them during this process).


  • Some strata policies cover the cost of temporarily housing an owner’s pet/s if pet-friendly accommodation cannot be secured.


  • The entitlement to temporary accommodation ceases upon the completion of repairs (when the unit is returned to its pre-loss condition).


  • For loss of rent, the insurer will cover the unit owner’s loss of rental income up to the point the unit is re-tenanted. If the tenant occupying the unit has vacated the premises due to it being unfit for occupation, the insurers may extend loss of rent cover up to the point a new tenancy is secured, as long as there are no unreasonable delays on the part of the unit owner/body corporate.



Each strata insurer has its own policy wording which outlines the terms, conditions, and exclusions applicable to temporary accommodation and loss of rent. This can result in differences in the level of cover offered by each strata insurer, such as the following:

(a)          Certain strata policies such as CHU’s residential strata offering will cover rent abatements/reductions as reasonably required following a loss (as opposed to relocation), while certain other insurers will not extend coverage for rent reductions/abatements.

(b)         Strata Community Insurance Australia’s residential strata policy is currently the only policy that extends temporary accommodation to tenants, subject to certain policy conditions.



At Honan, our dedicated strata team works closely with partnering insurers, loss adjusters, and attending builders to ensure temporary accommodation and loss of rent claims are assessed in a timely manner for policyholders. We remain on hand to assist throughout the lifespan of each claim and support unit owners throughout the process.  



In the event of a claim, please reach out to your Honan broker or our Claims team to discuss the next steps.


Sushendra Fernando

Claims Team Lead – Strata VIC


Lucy Guan

Claims Team Lead – Strata NSW


Chris Glass

State Manager (QLD)


Brooke Groth

Claims Executive (WA)


*This article was prepared by Sushendra Fernando and Scarlett Palinkas.



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