Body corporate insurance in Queensland: what must be insured, who pays, and how claims work

Insurance is usually the single largest line in a Queensland body corporate's administrative fund budget, and it is one of the few areas where the legislation leaves the committee almost no discretion about whether to act. The Body Corporate and Community Management Act 1997 (BCCM Act) s 189 lets the regulation module set the insurance a body corporate must carry, and the Standard Module (the BCCM (Standard Module) Regulation 2020) does so in chapter 8, part 6 (ss 195 to 209). The Accommodation Module has equivalent rules with different numbering.

The short version: the body corporate must insure the buildings and the common property for full replacement value, must hold at least $10 million of public liability cover, must get an independent valuation at least every 5 years, and must tell owners at every AGM exactly what it has bought, from whom, and who was paid a commission for it.

What the body corporate must insure

Cover	When it applies	Standard Module
Building (reinstatement) insurance	Every building containing a lot on a building format plan or volumetric format plan, to the extent the building is scheme land	s 198
Building insurance for attached houses	On a standard format plan, every building that shares a common wall with a building on an adjoining lot	s 199
Common property and body corporate assets	Always, to the extent the common property is not already covered by the building policy	s 197
Public risk (public liability)	Always, for the common property and body corporate assets: at least $10m for a single event and $10m per period of insurance	s 206

All the property covers must be for full replacement value, must cover a defined list of damage (earthquake, explosion, fire, lightning, storm and water; glass breakage; impact, malicious act and riot), must pay incidental costs such as debris removal and architects' and other professional fees, and must reinstate the property to its condition when new (ss 195, 197 to 199). "Water" in the module is not the same thing as flood: whether riverine flood is covered depends on the policy wording, so read the definition and the exclusions at every renewal.

Two exceptions to the building cover matter in practice. A subsidiary scheme need not duplicate building cover its principal scheme is already required to hold, and a building governed by a registered building management statement that provides comparable insurance does not need a second policy (s 198(5) and (6)).

Standard format plans with stand-alone houses

Where a basic scheme on a standard format plan has stand-alone buildings with no common wall, the body corporate is not required to insure them. Each owner insures their own house, as they would on freehold land. The body corporate may set up an optional voluntary insurance scheme that owners can join (s 204); money paid out under it goes to the owner of the damaged building, subject to any mortgagee (s 209). If there is no voluntary scheme and an owner of a stand-alone house improves the common property, that owner must insure the improvement themselves and give the body corporate the policy details (s 204(6)).

What "the building" includes, and what it leaves to owners

The building policy covers the structure and the improvements and fixtures that form part of it, including the kitchens, bathrooms, built-in wardrobes and fixed floor tiles inside each lot. Standard Module s 195 expressly excludes:

• carpet, and temporary wall, floor and ceiling coverings (floating floors and similar are often argued over; check the policy);
• curtains, blinds and other internal window coverings;
• fixtures a tenant can remove at the end of a lease;
• air-conditioning units servicing a particular lot;
• dishwashers, dryers and other appliances that are not wired or plumbed in.

None of the owner's contents or personal liability inside the lot is covered either. Owner-occupiers need a contents policy that picks up those items; landlords need landlord insurance for rent default, tenant damage and loss of rent, which the body corporate policy does not provide. Neither the body corporate nor the committee is responsible for either.

Valuation: full replacement value, every 5 years

The body corporate must obtain an independent valuation of the full replacement value of the buildings at least every 5 years (s 200), and insure to that figure. At establishment, the original owner must obtain the first one from a quantity surveyor or registered valuer and insure to it (BCCM Act s 191). The valuation's cost is shared between owners in proportion to their share of the reinstatement premium and is usually collected through the administrative fund.

Under-insurance is the body corporate's problem, not the owners': if the sum insured falls short of the actual reinstatement cost, the body corporate must fund the gap (ss 198(4), 199(4)). Construction costs have outpaced general inflation for several years, so many committees index the sum insured each year between formal valuations rather than wait the full 5 years.

How the premium is shared

Premiums are levied as part of contributions, but not always on the contribution schedule that drives ordinary levies:

Premium	Shared by	Standard Module
Common property and body corporate assets	Interest schedule lot entitlement	s 197(4)
Building (reinstatement) insurance, building format plan	Interest schedule lot entitlement	s 201(1)(a)
Building insurance, standard format plan	The cost of reinstating the buildings on each lot	s 201(1)(b)

The body corporate may then adjust an owner's share to reflect fixtures and fittings of a higher standard than the scheme generally, improvements to common property that benefit the lot, or risky activities on the lot (s 201(2)). The module's own example is an owner who starts a small business storing flammable chemicals and pushes the premium up: that owner pays the increase.

Owners have matching duties. An owner who makes improvements that raise the standard of their lot's fittings, or improvements to common property for their lot's benefit, must notify the body corporate of their nature and value as soon as practicable once they are substantially complete; an owner who does not may have to reimburse the body corporate for a claim shortfall caused by the omission (s 202). An owner must also tell the body corporate about any use of the lot that is likely to increase the premium (s 207).

How contributions and the two lot-entitlement schedules work generally is in the levies guide.

Excesses: who pays on a claim

The body corporate may choose a policy with an excess, but the arrangement must not impose an unreasonable burden on individual owners (s 203). The default allocation is:

• Event affecting only one lot: the owner pays the excess, unless the body corporate decides that is unreasonable in the circumstances. The module's examples: a broken shower screen is the owner's excess; a fire caused by a short circuit in wiring inside an internal wall might fairly be the body corporate's.
• Event affecting two or more lots, or a lot and common property: the body corporate pays, unless it decides it is reasonable for a particular owner, or several owners, to pay or share it.

Rising premiums have pushed many schemes to high excesses, especially for water damage. A $10,000 water excess passed to a single owner for a burst flexi-hose may be challenged as unreasonable, so set the excess with s 203 in mind and record the reasoning when you decide who pays.

Insurance money received for damage must be applied as soon as practicable to repair, reinstatement or replacement, unless a resolution without dissent authorises another use (s 208). The registered mortgagee of each lot is automatically taken to be noted on the policy (BCCM Act s 192).

Renewals and the committee's authority

Renewal is routinely more than the committee spending limit of $200 multiplied by the number of lots. The Standard Module makes a specific exception: the committee may put in place or renew a required policy above its spending limit without a general-meeting resolution, provided the decision is not on a restricted issue (s 172(1)(e)). An insurance decision becomes restricted if the body corporate has reserved it for ordinary resolution, which some schemes do after a disputed renewal.

When the committee uses that power above its limit, it must obtain and consider at least two quotations before deciding, or attach copies of them to a motion decided outside a meeting, and keep the quotations with the minutes. A single quote is acceptable only for exceptional reasons (s 173(2) to (6)). In practice the broker obtains comparative quotes; make sure the minutes record them and not just the broker's recommendation.

Additional covers are optional. The Act allows the body corporate to put in place any insurance beyond the minimum (s 189(4)), and most schemes carry some of: office bearers' liability, fidelity guarantee, voluntary workers, machinery breakdown (lifts, pumps, plant), catastrophe cover for post-disaster cost escalation and temporary accommodation, and government audit costs. If the body corporate employs anyone directly, workers' compensation through WorkCover Queensland is compulsory under separate legislation.

AGM disclosure

Every annual general meeting must include a statutory motion reviewing each insurance policy held by the body corporate (the Standard Module's definition of "statutory motion"; the first AGM must also review the original owner's policies under s 94). With the notice of the AGM, or in a note to the proposed administrative fund budget, owners must be given for each policy (s 196):

• the insurer, and any broker or intermediary involved;
• the amount of cover, a summary of the type of cover, the premium, the excess, and the expiry date;
• the amount, type and provider of any commission or other benefit paid by the insurer or broker to the body corporate, any owner, any committee member, the body corporate manager or a service contractor, or their associates;

and for the buildings, the full replacement value from the latest valuation and the date of that valuation.

The commission line is the one that attracts complaints. Commission is lawful but must be disclosed in full, with the recipient named. An AGM notice that omits it, or bundles it into a vague "industry standard remuneration" line, does not comply. The broader AGM agenda is covered in the AGM guide.

When cover cannot be obtained

In flood-prone or high-risk areas a body corporate may be unable to buy full replacement building cover at all. Since the 2023 amendments, the Act gives it a way out: the body corporate can apply to an adjudicator for an alternative insurance order (BCCM Act ss 189(2) and (3), 281A). The adjudicator must be satisfied the body corporate cannot comply and that the alternative cover is as similar as practicable to what the module requires, and may consider how many insurers were approached, why they declined, and the cost of complying. If the alternative was not approved at a general meeting, the order can be made conditional on owners approving it within a stated time. Keep every declinature and quote; they are the evidence the application needs.

Common mistakes

1. Insuring to last year's sum insured. The 5-year valuation is the maximum interval, not a target; under-insurance shortfalls fall on the body corporate.
2. Treating the building policy as owners' contents cover. Carpets, blinds, loose appliances, split-system air-conditioners serving one lot, and personal belongings are excluded and need the owner's own policy.
3. Passing every excess to the owner of the lot where water appeared. Under s 203 that is only the default for single-lot events, and only if it is not unreasonable.
4. Leaving commissions out of the AGM notice. Section 196 requires the amount, type and recipient of every commission or benefit.
5. Renewing above the committee limit on one quote without an exceptional reason recorded.
6. Owners not declaring improvements. A $90,000 kitchen nobody told the body corporate about can leave the owner liable for the shortfall on a claim.
7. Spending insurance money on something else without a resolution without dissent.
8. Losing the paperwork. Policies, schedules, valuations, quotes and claim files are body corporate records that owners and buyers are entitled to inspect.

How StrataPilot handles this

StrataPilot keeps the scheme's insurance register in one place: every policy with its insurer, policy number, sum insured, premium, period and the policy document, building, public liability, office bearers', fidelity, machinery and voluntary workers alike, with claims recorded against the policy they were lodged under. Policies approaching expiry are flagged on the committee dashboard and the treasurer and chairperson are emailed ahead of renewal, a missing or lapsed compulsory cover raises a critical alert, and the building policy prompts for a fresh replacement-value assessment well before the 5-year limit. Certificates of currency and valuations are stored in the document library under the Insurance category, and the AGM's insurance review motion runs through the platform's voting with the results recorded for the minutes.

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This guide is general information about Queensland legislation, current as at the "last updated" date above — it is not legal or insurance advice. Section numbers are from the BCCM Act and the Standard Module; the Accommodation, Commercial and Small Schemes Modules contain equivalent provisions with different numbering. For decisions that matter, check the current legislation and your policy wording, speak to a licensed insurance broker, or ask the Office of the Commissioner for Body Corporate and Community Management.