Strata corporations could be overlooking the sizeable threat that seismic events in Australia pose to their properties.
The peak body for Australia’s strata industry has warned owners groups in New South Wales about risk in relation to regional seismic events, and advised that they become more proactive about reviewing and seeking earthquake-related insurance coverage.
Kim Henshaw, CEO of Strata Community Australia (SCA) said that the string of strong seismic events that recently took place near Queensland serves as a timely reminder to strata committees of the need to be fully apprised of their insurance arrangements in relation to earthquakes.
“In light of the fairly large earthquake which took place off Queensland last month, we just want to make sure that this issue is raised with owners corporations,” said Henshaw to Sourceable. “We want remind them to go back and look at their insurance coverage and make sure that it’s adequate, make sure there are no onerous conditions on it, as well as make sure that it in fact exists.
“The aim of the game for these groups should be to ensure that strata properties are adequately insured to deal with the possibility of earthquakes in New South Wales…we urge owners corporations and committees to get proactive and review earthquake insurance as soon as possible.”
A series of eight earthquakes took place off the coast of Queensland at the end of July and the start of August, several of which possessed the strength of an atomic blast.
According to Dan Jaksa, Geoscience Australia senior duty seismologist, three of the earthquakes that occurred around 120 kilometres east of Fraser Island registered magnitude-5 or above – equivalent to an atomic bomb test.
One of the earthquakes had a magnitude of 5.7, which is the equivalent of 15 atomic blasts of energy, and more powerful than the earthquake that devastated Newcastle nearly three decades ago.
Official data shows that many communities in Australia are potentially vulnerable to earthquakes, despite the country’s general reputation as a refuge from seismic events due to its distance from major fault lines.
Figures from Geoscience Australia indicate that he country recorded a total of 661 earthquakes and tremors in just the past year, of which 78 took place in NSW.
According to the SCA complacency over this issue could be a problem for owners’ corporations and committees given the surprising prevalence of seismic activity in Australia.
“We want people to abandon the complacent ‘this won’t happen to me ‘ psyche, because contrary to assumptions, Australia is a very active location for seismic events,” said Henshaw.
“This isn’t the dramatic sounding of an alarm for strata property stakeholders in New South Wales, but if we are to keep strata communities safe moving forward, there needs to be a mindset shift and the emergence of some proactive behaviours.”
Henshaw said that members of the strata community need to pay special attention to insurance matters given the unusual nature of their property ownership arrangements.
“Insurance is an extremely important part of the strata world, because an individual lot owner doesn’t actually own the building – he only owns his lot within it. It’s the owners committee that is responsible for the shell of the building and any common property.
“So it’s important that lot owners, owners corporations and strata mangers just keep an eye on this issue and make sure that they are adequately covered.”
The issue could also be one of rising importance for Australia’s property sector in general, given the expansion of high-density residential buildings under strata arrangements in major cities.
“A lot has changed since the Newcastle earthquake, including the evolution of engineering and construction practices; but our cities are also more populated and strata title properties like apartment blocks and high rises are attracting a growing number of owners/residents and investors.”
Henshaw noted that strata buildings with earthquake insurance will enjoy automatic coverage for damage in the event of any seismic event categorised as an earthquake by the Insurance Council of Australia.
“A range of providers offer really good protection for strata property stakeholders with the right cover in place, but we’re wary that there are not enough people out there who have ticked this first box.”