Body Corporate Insurance Valuations

Insurance valuation

Body corporate insurance valuations are a vital tool in ensuring (pun intended) lot owners are fully indemnified should anything happen to the body corporate.

The Body Corporate & Community Management Act 1997 says

The body corporate must take out the following building insurance:

– building format plan (BFP) — insurance for the full replacement value of each building which contains a lot
– standard format plan (SFP) where a building on one lot has a common wall with a building on an adjoining lot — insurance for each building to its full replacement value.

That’s pretty straightforward. If the body corporate is required to insure, the building must be insured to the full replacement value. How to calculate that figure is, like almost  everything else body corporate, regulated as well.

The full replacement value of the body corporate is required to be calculated by a qualified quantity surveyor in the form of an an Insurance Valuation. The building must be insured to that value and the valuation held in the body corporate records.

An insurance valuation must be obtained, from a professional, every five (5) years.

Part of the legislative compliance of a body corporate checked when undertaking a pre-purchase strata search is whether or not the insurance valuation is current, and if it is, whether or not the building is insured to that minimum value.

Who pays for the body corporate insurance?

This is kind of trick question.

Body corporate insurance is the responsibility of, well, the body corporate, and each year the premium will be paid from administrative funds. Ultimately though the lot owners pay. That’s because the lot owners pay everything. All body corporate costs are funded by levies.

How much each lot pays can differ from body corporate to body corporate, depending on the value of interest and contribution lot entitlements.

In Queensland the percentage each lot owns of the total value of the body corporate is determined by the interest schedule lot entitlements. These may differ from the contribution schedule lot entitlements which are used to calculate how much each lot pays toward the upkeep of the scheme.

If interest and contribution schedule lot entitlements differ a separate insurance levy will be struck to recover body corporate insurance costs, whether only common property or full replacement valuation.

If interest and contribution schedule lot entitlements are equal then the insurance premium recovery is simply included in the administrative fund levy for the year.

For more information about insurance please read


A little knowledge can go a long way

I see so many stressful and frustrating issues in body corporate records that result from simple misunderstandings it hurts my head. If I could do one thing to help it would be to teach everyone the basic rules, so they can avoid all these dramas.

With that in mind I've put together a short eBook that sets out the basics everyone owning in a body corporate really should know. It won't make those big issues go away, but it will give you a firm grounding from which to communicate.

It's completely free, so please, download it now!

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