Commercial Property Insurance With Strata / Body Corporate Properties: What Landlords Think They Know vs What They Really Need to Know

If you’re a landlord or commercial property owner of a strata property and you’re asking, “Isn’t that covered by the body corporate?” - this page is for you.

Because when it comes to commercial property insurance, assumptions are dangerous, clauses are confusing and grey zones get expensive - fast.

Here’s the truth most people don’t hear until it’s too late:

✅ Some things are clearly covered by the body corporate.

❌ Some are 100% the owner’s responsibility.

⚠️ And some fall into that murky middle ground where no one claims responsibility - until you’re out of pocket.

This page will show you:

1. What your insurance should cover (but often doesn't)
2. The critical clauses you need in your lease
3. What body corporate won't cover and why
4. How to bulletproof your rental income with smart policy structuring.

What Is Commercial Property Insurance?

Let’s get one thing clear up front:

Commercial property insurance is NOT just a "tick the box" requirement. 

It's your frontline defence agains fire, theft, loss of rent, storm damage, liability claims, equipment breakdowns and legal nightmares.

This is the policy that protects the building, not your tenant’s stock or your kitchen bench - the walls, roof, plumbing, fixed assets and sometimes your rental income too.

But it’s not one-size-fits-all.

If you own multiple properties, strata lots, standalone industrial units, or retail assets, you need to know exactly what’s covered… and what’s quietly excluded.

Here’s Where Most Landlords Get Caught Out In Insurance With Strata Properties

Too many commercial landlords assume their body corporate insurance covers everything. Wrong.

Let me give it to you straight:

Area	Who’s Responsible?
External walls, roof, and structure	Usually body corporate (strata schemes only)
Internal air-con	Landlord or tenant, depending on lease
Tenant fit-out damage	Rarely covered – tenant’s contents insurance applies
Loss of rent	Only covered if available and added to your landlord insurance
Machinery breakdown	Typically NOT covered unless specified
Public liability inside unit	Often the owner’s or tenant’s separate responsibility
Glass breakage	Sometimes excluded, often requires plate glass add-on

If you’re not across this, you could be:

1. Paying out-of-pocket for repairs you assumed were insured
2. Fighting with insurers during rent loss disputes
3. Leaving gaps that turn into five-figure liability claims

And the worst part?

No one tells you about it until the claim is denied.

Real Talk: What Should Your Strata Property Insurance Cover?

Here’s the gold standard of protection that proper commercial property insurance should provide:

Core Coverage:

1. Building damage (fire, storm, malicious damage
2. Theft or vandalism of fixtures and fittings
3. Rent default and loss of rent (optional add-on)
4. Public Liability (on common or private property)
5. Machinery Breakdown (e.g. HVAC, lifts)
6. Glass Breakage (must be specified)
7. Tax investigation (if included)
8. Emergency repairs and debris removal

But here’s the catch - not all policies include this by default.

And if your broker or manager isn’t proactive, these protections might be missing from your cover entirely. That's if you even bother to ask and not assume the Body Corporates Insurance covers everything.

Body Corporate Insurance vs Landlord Insurance: Know the Difference

Let’s clear this up once and for all.

If your commercial property is part of a strata or community title scheme, you’ll be contributing to body corporate insurance. Great. That covers:

1. Structural components (walls, roof)
2. Common property (driveways, shared facilities)
3. Public liability on common areas
4. Reinstatement and professional fees

But it does not cover:

1. Fixtures specific to your lot (non-permanent items or tenant-installed items that end up being your assets)
2. Internal public liability (inside the tenant's area)
3. Floating floors, blinds, carpets, mobile air con
4. Internal glass or mirrors
5. Your rental income if the tenant can't trade
6. Contents or equipment damage
7. Legal expenses relating to disputes

Translation?

If you think your property is covered "because it's in a strata," think again.

Who Pays for Property Insurance In A Strata Property?

This is where it gets legal, technical and lease-specific.

General Rule:

• Body Corporate has insurance
• The tennant has their own insurance
• The Landlord holds insurance that fills the gaps that tenant and body corporates insurance doesn't have

But here’s what REALLY matters:

1. Retail leases in some states may restrict what you can claim back from the tenant if you're recovering insurance through Outgoings.
2. Outgoings clauses in your lease determine if, when and how insurance costs are recovered.
3. Disputes often arise when these aren't crystal clear - or were never reviewed in the first place.

Pro Tip:

Don’t guess. Get a clear, lease-backed breakdown of:

1. Who arranges the policy
2. Who pays for it
3. What the coverage includes
4. What outgoings can be passed on

Because no lease = no leverage when things go sideways.

Hidden Gaps That Cost Landlords Thousands

Here’s a list of real-world issues I’ve seen commercial landlords lose money over:

❌ Plate glass not covered → $4,500 out of pocket

❌ Tenant-installed A/C (that the ownership transferred to the Owner on new tenant)  broke down → not covered, owner had to pay

❌ Water leak from upstairs within the same tenancy → not claimable under body corporate

❌ Tax audit expenses → no policy in place, owner paid legal fees

Each of these could’ve been avoided with correctly structured commercial property insurance + proactive lease terms.

Real-World Lesson: When “She'll Be Right” Became $20,000 Wrong

Let me tell you about a client who thought everything was sweet because “Body Corporate covers that, right?”

Turns out... not even close.

Their tenant had installed a stairwell in a common area during their tenancy - no biggie at the time. It was all above board, body corporate approved the alteration, signed off in a separate agreement outside the lease.

Fast forward a few years:

1. Tenant defaults and disappears without a trace
2. Lease ends
3. Owner forgets about that extra agreement
4. The separate document was never handed to the new property manager during the management handover.

Guess what happened?

• That stairwell had to be removed as part of the make-good
• The owner got slugged tens of thousands of dollars to rip it out
• And when the insurance broker was asked if it could have been covered?
  
• The answer: yes - if a policy had been structured property and the agreement disclosed.

This wasn’t bad luck. It was a gap in documentation, insurance planning and lease management.

Lesson?

Your insurance is only as strong as your paperwork.

Must-Have Lease Clauses Around Insurance

If you want to protect your income, reputation and sanity, your lease should include:

1. Insurance Clause: Specifies who arranges what policies
2. Outgoings Clause: Breaks down what insurance costs can be recovered
3. Indemnity Clause: Limits your liability and protects you in disputes
4. Public Liability Clause: Requires tenants to maintain coverage
5. Plate Glass Insurance: Covers Glass Breakage
6. Repair + Make Good Clause: Ensures insurance aligns with fit-out liability

If these aren’t in there or they’re vague?

You’re exposed. 

Your Insurance Coverage Is Only as Good as You Make It

Relying on other people's insurances without fact checking and reviewing is just playing Russian roulette with your wallet.

Because you don’t want to find out you’re not covered after the disaster.

How We Help

When we manage your property, we don’t just tick the “insurance” box.

We'll pop in contact with an Insurance Broker where you can,

1. Review policies annually
2. Negotiate lease clauses before it's too late
3. Make sure tenant and landlord obligations are crystal clear
4. Stay compliant with leasing laws
5. Recover what's rightfully yours during a claim

Bottom Line on Strata Property Insurance

If you’re serious about protecting your asset, your rental income and your peace of mind, you need to treat commercial property insurance like the financial safeguard it is - not an afterthought.

It’s not just about what’s in the policy.

It’s about what’s in the lease, what’s in the fine print, and who’s actually paying for what.

Because when disaster hits, you’ll either be covered…

Or you’ll be caught.

Ready to Audit Your Insurance Setup?

Let’s make sure your policy, lease and asset strategy are working together and not against you.

No pressure. Just clarity.

Checkout the Infograph below.