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.



Rising Insurance Premiums: How global markets impact local pricing


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



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