Body Corporate and Community Management (Accommodation Module) Regulation 2020 (Accommodation Module)

INSURANCE - Insurance obligations of a scheme in a volumetric plan Where scheme is located wholly within a building governed by a Building Management Statement

ALTERNATIVE INSURANCE - where scheme has applied for an alternative insurance order due to inability to obtain insurance

Act, ss 189, 281A, item 3A of Schedule 5

Accommodation Module, ss 188(2), 188(6)

• [1] I declare that having regard to subsection 188(6) of the Accommodation Module the body corporate is not required to obtain insurance under subsection 188(2) because it is located in a building for which there is comparable insurance in place under registered Building Management Statement No. 703766626.
• [2] An alternative insurance order is not required and the application is therefore dismissed.

• [3] The applicant is the Body Corporate for Coral Sea Resort CTS, located at Airlie Beach. It consists of 15 lots and is regulated by the Act and the Accommodation Module.
• [4] The outcome sought by the applicant is that an Adjudicator approve an "Alternative Insurance Arrangement" being a policy taken out by EMPRJA Pty Ltd Pty Ltd (ATF Darrouzet Property Trust) with Assicurazioni Generali SPA, providing parametric insurance cover of $5,000,000, including damage and loss caused by cyclone, for the period 12 October 2024 to 12 October 2025.

• [5] Coral Sea Resort was one of the first developments in Queensland to be created as a volumetric subdivision. It consists of two volumetric lots governed by a Building Management Statement.
• [6] One lot, the "Resort Lot", is owned by EMPRJA Pty Ltd and includes all the actual ground content including gardens, roads, car parks and buildings.
• [7] The other lot comprises the Coral Sea Resort Community Title Scheme (Scheme Land), being the lots and a common property area of negligible size. The scheme land exists entirely within the internal walls, ceiling and floor of the building. The exterior walls of the building belong to EMPRJA Pty Ltd Pty. Ltd. as part of the resort lot.
• [8] The governing Building Management Statement contains provision for a number of items including insurance, maintenance and sharing of facilities. It provides that the Management Group established under the BMS is required to take out a policy of insurance owner for the building which must:

(a) cover damage;

(b) costs incidental to the reinstatement or replacement of insured buildings, including the cost of taking away debris and the fees of architects and other professional advisers;

(c) provide for the reinstatement of property to its condition when new.

• [9] However there has been some uncertainty on the part of the body corporate regarding responsibility for insurance, and it has unsuccessfully sought to insure the building. Attached to the application is a spreadsheet containing details of numerous insurers who declined to provide insurance coverage to the body corporate.
• [10] By resolution dated 17 January 2025, the committee authorised the body corporate secretary to submit an application for an alternative insurance order

• [11] Section 188 Accommodation Module provides as follows:

(1) This section applies if 1 or more of the lots included in the community titles scheme are created under a building format plan of subdivision or a volumetric format plan of subdivision.

(2) The body corporate must insure, for full replacement value, each building in which is located a lot included in the scheme, to the extent that the building is scheme land.

(3) A policy of insurance taken out under this section -

(ii) costs incidental to the reinstatement or replacement of insured buildings, including the cost of taking away debris and the fees of architects and other professional advisers; and

(b) must provide for the reinstatement of property to its condition when new.

• [12] However the obligation to insure the building is subject to an exception in subsection 188(6) which provides:

(6) The body corporate need not insure a building or a part of a building under subsection (2) if

(a) the building or the part of the building is scheme land; and

(b) the whole of the building is the subject of a building management statement registered under the Land Title Act 1994; and

(c) the building management statement provides for insurance for the building to a level comparable with insurance otherwise required under this part; and

• [13] In summary, subsection 188(6) provides that a body corporate need not obtain insurance if it is located in a building for which there is comparable insurance in place under a registered building management statement.
• [14] I have perused the Building Management Statement (BMS) and note that under clause 7.4 of the BMS[1] the Management Group is required to take out a policy of insurance owner for the building which must:

(a) cover damage;

(b) over costs incidental to the reinstatement or replacement of insured buildings, including the cost of taking away debris and the fees of architects and other professional advisers;

(c) provide for the reinstatement of property to its condition when new.

• [15] I have been provided with a copy of the Certificate of Insurance provided by Assicurazioni Generali SPA which provides parametric insurance cover of $5,000,000 for the building, including coverage for damage and loss caused by cyclone, for the period 12 October 2024 to 12 October 2025.

• [16] Having regard to subsection 188(6) of the Accommodation Module I am of the view that the body corporate is not required to obtain insurance under subsection 188(2) because it is located in a building for which there is comparable insurance in place under registered Building Management Statement No. 703766626.
• [17] It follows that an alternative insurance order is not required and the application is therefore dismissed.