Owning or managing a strata property can be challenging, especially when dealing with building defects that, if left unchecked, can lead to costly repairs and increased strata insurance premiums. For Owners Corporations, taking a proactive approach to defect management is crucial in protecting the property and keeping insurance costs under control.

This guide will walk you through how you can manage these defects effectively, work with the right people, and avoid seeing those premiums skyrocket.

Why Building Defects Are Becoming More Common in Strata Properties

Defects in strata properties are becoming increasingly common across Australia, affecting both residential and commercial developments. From waterproofing failures in new buildings to structural deterioration in older properties, defects can arise due to a variety of factors, including rushed construction and aging infrastructure.

For Owners Corporations, these issues create significant headaches, often leading to costly repairs and insurance claims. The unfortunate truth is that defects are an inevitable part of property ownership, and their impact on strata insurance can be severe if not addressed promptly.

Understanding how widespread these issues have become can encourage Owners Corporations to act quickly, ensuring they are well-positioned to manage defects and keep their insurance costs under control.

Why Building Defects Impact Your Strata Insurance Premiums

Building defects can significantly affect your strata insurance because they raise the risk profile of the property. Insurers see unresolved defects as potential future claims, which can lead to increased premiums at renewal. Here’s how common defects can impact your insurance:

Waterproofing failures: These often lead to water damage, mould, and deterioration of walls and floors, resulting in multiple claims that push premiums higher.
Cracking walls or structural issues: If left untreated, these issues can compromise the safety and structural integrity of the building, leading to more severe and expensive claims.
Electrical faults: Faulty wiring or outdated systems not only pose a safety risk but can also lead to claims related to fires, which are among the most expensive types of claims.

The Role of Strata Insurance in Covering Defects

Now, it’s important to clarify that strata insurance typically covers damage caused by defects but doesn’t usually cover the cost of rectifying the defect itself. This means, if a defect leads to damage (such as a leaking roof causing internal water damage), your insurance may cover the cost of repairs for the damage but not the cost of fixing the roof itself.

This is where things get tricky. The longer defects are left unresolved, the more likely they are to cause additional damage, which increases your chances of making multiple claims. These claims, in turn, lead to a higher risk profile and, ultimately, higher premiums.

If you’re unsure about your coverage, chat with one of our expert in Strata insurance. Check out Knightsbridge Insurance for some friendly advice.

What Can You Do?

The answer lies in being proactive. The earlier you identify and rectify building defects, the better your chances of controlling your premiums and avoiding potential issues that might not be covered under your insurance policy. But how do you go about this?

Step-by-Step Guide to Managing Building Defects in Strata Properties

Here’s a step-by-step guide to managing building defects in your strata property to ensure they don’t impact your strata insurance premiums.

1. Regular Building Inspections

One of the most effective ways to prevent defects from escalating into larger problems is to conduct regular building inspections. Whether it’s a new commercial development or an older residential strata property, building inspections help to catch defects early on, giving you time to rectify them before they cause significant damage.

Many strata property managers schedule annual or bi-annual inspections to ensure they’re staying on top of potential issues. During these inspections, it’s crucial to look for any signs of structural damage, water ingress, or faulty electrical systems, as these are the most common defects that can lead to insurance claims.

2. Act Quickly to Rectify Defects

Once a defect has been identified, it’s essential to act quickly. Delaying repairs can not only increase the risk of further damage but may also signal to your insurance provider that your property is at higher risk, leading to increased premiums.

Let’s say you notice cracks forming in the walls of a commercial strata building. Rather than waiting to see if they worsen, addressing the issue immediately will prevent more severe structural damage and, ultimately, save you money on both repairs and premiums.

3. Work with an Insurance Provider

One of the most effective ways to manage the impact of building defects on your insurance is by working with an experienced strata insurance Provider. Insurance provider have deep knowledge of the industry and can guide you in choosing the right policy that covers defect-related risks without costing you a fortune in premiums.

Insurance Providers can also help you review your current policy to ensure that any building defects won’t be overlooked when it comes to coverage. This is particularly important if you’re managing multiple properties or have recently taken over a property with pre-existing defects.

Ready to get started? A good Insurance provider can make all the difference—consider reaching out to Knightsbridge Insurance for tailored support.

4. Document Everything

When managing defects, documentation is crucial. Insurance companies rely on clear evidence to assess claims and determine the level of risk associated with your property. Ensure that any defects are well-documented, including:

Inspection reports
Photos of the defect
Records of any repairs or maintenance conducted

This not only makes the claims process smoother but also provides a clear timeline of how defects were managed, reducing the likelihood of disputes with your insurer.

5. Consider Preventive Maintenance

Preventive maintenance is one of the most cost-effective strategies to manage building defects. By addressing minor issues before they develop into significant problems, you can avoid making multiple insurance claims that could raise your premiums.

For example, regular maintenance of roofing, plumbing, and electrical systems can significantly reduce the chances of defects occurring in the first place. Many property owners invest in preventive maintenance plans, where professionals are contracted to perform regular check-ups and fixes on key building systems.

6. Know the Difference Between Commercial and Residential Strata Insurance

It’s important to note that there are differences in how commercial and residential strata insurance respond to building defects. Commercial strata properties tend to have higher risk profiles due to the type of activities carried out within the building, which can lead to more frequent claims. Therefore, building defects in commercial properties need to be addressed even more urgently to avoid escalating premiums.

On the other hand, residential strata properties typically have lower risk profiles, but defects can still lead to costly claims if not handled swiftly. In both cases, a good insurance provider can help tailor your policy to suit the unique risks of your property.

Knightsbridge Insurance Providers: Your Trusted Experts in Strata Insurance

Building defects can create significant stress for property owners and managers, but with a proactive approach, they don’t have to lead to rising strata insurance premiums.

By conducting regular inspections, swiftly addressing defects, collaborating with an experienced insurance provider, and implementing preventive maintenance, you can effectively protect your property while keeping your insurance costs in check.

If you’re facing challenges with building defects and are concerned about their potential impact on your strata insurance, now is the perfect time to take action.

Connect with a one of our experienced insurance provider today to review your policy and ensure you’re fully covered against any potential risks.

Why Choose Knightsbridge Insurance Group?

Expertise in Strata Insurance: Our team possesses deep industry knowledge, ensuring you receive the best advice tailored to your needs.
Comprehensive Coverage: We help you find the right policy that covers defect-related risks, providing peace of mind without breaking the bank.
Personalised Service: We take the time to understand your unique circumstances and guide you through every step of the insurance process.
Proactive Support: Our insurance providers are here to assist with policy reviews, ensuring that any building defects are adequately addressed in your coverage.

Feel free to reach out to one of our Strata Insurance Experts to discuss your options before committing to any policy. Your future self will thank you for it!

Strata Insurance: Managing Building Defects to Prevent Rising Premiums