What’s Not Covered by Community Scheme Insurance – And Why – Understanding exclusions and owner responsibilities
💡 Why Exclusions Matter
Even though community living insurance provides broad protection, every policy has exclusions – specific situations or causes of damage that the insurer won’t pay for. Understanding these limits helps owners avoid claim rejections, manage maintenance properly, and know when responsibility lies with the owner or the Body Corporate.
⚙️ Common Exclusions
Here are some of the most frequent reasons a claim may not be covered:
- Lack of maintenance — gradual deterioration, rust, or leaks that result from neglect.
- Wear and tear — natural aging of materials like roof waterproofing, paint, or plumbing.
- Defective workmanship or design flaws — structural issues caused by poor construction or materials.
- Consequential loss — secondary or indirect costs, such as cancelling a holiday due to repairs.
- Intentional or fraudulent acts — deliberate damage or false claims.
- Power surges and load-shedding damage — many policies now exclude grid-related electrical damage.
- Damage by pets, vermin, or insects — typically excluded unless caused by an insured peril (e.g., fire).
- Vacant or unoccupied units — theft or vandalism may be excluded if a unit has been empty for too long.
🧱 Maintenance vs. Insurance
It’s important to remember that insurance is not a maintenance plan.
If the cause of damage could have been prevented through routine upkeep, the claim will likely be declined.
Example:
If gutters are never cleaned, and heavy rain causes them to overflow and damage interior walls, this is not an insurable event — it’s a maintenance failure.
Regular inspections, prompt repairs, and preventive maintenance protect your property and help the scheme remain insurable at a reasonable premium.
🧩 HOA Reminder
In Homeowners Associations (HOAs), the community’s policy applies only to shared property (roads, walls, security systems, parks, etc.) — not to private homes.
Each homeowner must take out their own building insurance for their house and contents insurance for what’s inside.
🧰 Practical Examples of Claims That May Not Be Covered
| Scenario | Reason for Exclusion |
| Rust and mildew forming on balcony rails | Gradual deterioration / maintenance issue |
| Tiles cracking due to building movement | Structural defect / settlement |
| Roof leaks from old, unmaintained waterproofing | Wear and tear / maintenance |
| Paint blistering from damp wall | Preventable maintenance issue |
| Electrical short from overloaded plug circuit | Negligence / not sudden accidental event |
| Power surge after load-shedding | Grid failure / excluded external event |
| Roof leak damages a TV and couch | Household contents, not part of community insurance |
🏠 Personal Policies Not Included
Community living insurance does not include your personal or private policies.
Owners and residents must arrange their own:
- Household contents insurance (for furniture, electronics, and valuables inside your home)
- Vehicle insurance (for cars, bikes, and trailers)
- Pet insurance or personal liability insurance
These are separate and at the owner or resident’s cost.
Example:
If a roof leak damages your lounge furniture, the scheme’s insurance may repair the roof — but your TV and couch fall under your home contents insurance.
💬 Key Takeaway
Insurance protects against sudden, unforeseen damage – not wear, neglect, or personal belongings. Understanding what’s not covered empowers owners to maintain their property, manage risk, and avoid frustration when a claim is declined.