Lot Owners’ Fixtures – Are they an additional extra or included automatically?

CHUiSaver have recently provided its customers with the option of an additional section titled ‘Lot Owners’ Fixtures and Improvements’.

But wait, does this mean that the fixtures in my unit are not covered by the strata policy unless this box is ticked?!

Even the StrataRatings’ Platinum policies have separate sections referring to fixtures within units:

CHU – Lot Owners’ Fixtures and Improvements (Policy 10)

SCI – Lot Owners’ Fixtures and Improvements (Section 10)

SUU – Lot Owner’s Improvements (Section 12)

So what’s the deal? Are fixtures within my unit only covered if my strata scheme opts in to this extra policy section?

Well as it turns out, these ‘extra’ sections provide ‘extra’ cover, as fixtures within units are automatically included in the main building section of the policy.

Apart from a few items such as carpet, floating floors, paint and wallpaper, anything permanently affixed within your unit is mandated by law to be included in the strata policy. Most policies use the word ‘fixtures’ in their definition of ‘insured property’ so this will mean items that are permanently affixed to the building such as the kitchen, bathroom, laundry etc. are included.

So, what’s the ‘extra’ that these ‘Lot Owners’ Fixtures’ sections are giving us?

When we read the exact wording, these sections will contain something along the lines of ‘when the sum insured of the main building cover is fully used up, we will provide extra cover for fixtures within units’.

Pretend we have a 5 unit block. A valuer conducts the valuation, inspecting one the units, and gives a replacement value of the building at $1,000,000 which the scheme ultimately uses as it’s building sum insured.

Two months later, the building burns to the ground however it turns out that two of the unit owners had renovated their kitchens and bathrooms and to rebuild would now cost $1,200,000.

The Lot Owners’ Fixtures section of the policy would come to the rescue to provide the extra $200,000 required to rebuild to the same standard.

Insurers understand that there is no practical way to consistently assess the buildings replacement value and as such provide this extra cover.

So, despite the confusing title, it is a very pragmatic way to give unit owners a bit of extra peace of mind and saves a valuer knocking on your door every few weeks to see if you have done any renovations!

Remember, not all insurers include this cover so be sure to check out our Ratings when considering which insurer suits your scheme.