Why Your Strata Insurance Keeps Rising in 2026

You open the renewal notice expecting the usual bump. Instead the premium has jumped again: maybe 20%, maybe 40%, maybe more than the year before. Nobody on the committee can quite explain why. The building hasn't burned down, nobody's made a claim, and yet the single biggest line item in your budget has grown for the third year running.

If that's you, you're not imagining it, and you're not alone. Across Australia, strata insurance has become the cost that won't sit still. Two forces are colliding in 2026: the long shadow of natural-disaster pricing, and a building-defects crisis that insurers are now pricing in building by building. This article walks through why your premium keeps climbing and, more usefully, what your committee can actually do before the next renewal.

The short version

• Premiums have risen roughly 30-50% a year for many buildings over the past three years, even as the broad market starts to soften.
• Building defects are now a major premium driver: insurers treat unresolved defects as future claims waiting to happen.
• An estimated 85% of recently surveyed apartment buildings have at least one defect; 53% of NSW buildings have a serious one.
• Committees that document defects, fund their capital-works plan and shop the market through a specialist broker get materially better outcomes.

How much has strata insurance actually gone up?

The headline numbers are stark. In Victoria, owners corporations have seen insurance premiums rise an average of 30-50% year-on-year for three years running, according to StrataJem's 2026 outlook. In Queensland, increases of 25-40% have become common. The compounding is brutal: one 50-unit complex in Geelong saw its premium climb from $28,000 in 2022 to $95,000 in 2025, a 239% increase in three years.

Why so steep? Claims costs do most of the work. Around 40-60% of a strata premium is driven by claims, both from "natural perils" like cyclones, storms, floods and bushfires, and from everyday "attritional" claims like water damage, per Resolute Property Protect. Insurance claims from catastrophic weather events have risen nearly 50% over the past five years, and those costs are spread across every policyholder through reinsurance. Even a claim-free building in a quiet suburb pays for the floods up north.

The effect on your levies compounds quietly. Because insurance is often a third or more of a building's outgoings, a steady annual increase reshapes the whole budget within a few years.

Isn't the insurance market supposed to be softening?

This is where 2026 gets confusing, and where the defects story really begins.

The brokers are right that the broad market has eased. Barrack Broking notes that "premium volatility has eased compared to the post-pandemic hard market," and Resolute expects "good risks" to roll over at similar rates or even attract discounts in 2026. After several years of insurers retreating, capacity is returning, and a new underwriter is expected to enter the market mid-year.

So why is your premium still climbing? Because the market is splitting in two. Well-maintained, claim-free, defect-free buildings are starting to feel relief. Buildings with unresolved defects, cladding, a messy claims history or an out-of-date valuation are not. As Barrack puts it, strata insurance is now shaped by "how well risks are identified, managed and communicated, not just whether cover exists."

In other words: the market softening doesn't help you if your building is the risk. That is the single most important shift to understand about 2026.

What do building defects have to do with my insurance?

A lot, and the link is tighter than most owners realise.

A building defect is any fault or flaw in a building's design, construction or maintenance, from a leaking balcony membrane to compromised fire-stopping to genuine structural problems. They are not rare. Insurer CHU reports that 53% of NSW strata buildings surveyed had serious defects in common property, up sharply from 39% in 2021. Broker Bellrock puts it more bluntly: across buildings examined in NSW, Queensland and Victoria, 85% had at least one defect. Waterproofing failures alone account for around 42% of reported defects, and fire-safety issues another 24%.

Why a defect shows up on your insurance bill

Here's the part that catches committees off guard: strata insurance does not pay to fix defects. A standard policy covers sudden, accidental damage, not the cost of correcting faulty original construction. Worse, if a defect is shown to have caused the damage, the insurer may decline the claim altogether. Many policies carry explicit exclusions for damage arising from defects you knew about and didn't rectify.

So an unresolved defect hurts you three ways. It raises your premium, because insurers read it as a future claim waiting to happen. It can void the very claim you were counting on. And in serious cases it makes a building "hard to place," meaning fewer insurers will quote at all, or only with steep excesses and special conditions.

Defects also get more expensive the longer they sit. A small waterproofing fault becomes water damage, then structural degradation, then a six-figure remediation, each year compounding the last.

The encouraging flip side, noted by both CHU and Bellrock: insurers are willing to work with buildings that document their defects and show a credible, funded plan to fix them. A defect under active management is a very different risk from a defect being ignored.

What's changing in the rules in 2026?

The regulators have noticed too, and the direction of travel is clear: more scrutiny of defects, and more money set aside up front to fix them.

The NSW Strata Building Bond is rising from 2% to 3%. From 1 July 2026, developers of new strata buildings four storeys or higher must lodge a bond worth 3% of the building contract price (up from 2%) with the regulator before the occupation certificate is issued, per Netstrata. The bond funds repairs if defects are found during independent inspections at 15-18 months and again at 21-24 months after completion. NSW also plans to make Latent Defects Insurance, which covers major defects for up to 10 years, mandatory for high-rise buildings by 2028.

The NSW Strata Defects Survey is gathering evidence. The 2025 survey, run by Building Commission NSW with the strata industry, is the third in a series tracking serious defects in apartment buildings completed since mid-2018. The findings feed directly into future regulation. The early signal is genuinely hopeful: serious defects are trending down in the newest buildings.

Cladding remains a stubborn outlier. A NSW statewide audit identified 338 high-risk residential apartment buildings, and the government's Project Remediate has been working through roughly 225 of them. The program has been extended to 2027 with more than $105 million committed. Buildings with unresolved combustible cladding continue to pay some of the heaviest insurance penalties of all.

Taken together, the message to committees is unmistakable: defects are moving from a private headache to a regulated, documented, priced-in reality.

What can our committee actually do about it?

Plenty, as it turns out. Insurers reward buildings that can prove they manage risk, and most of that proof is within your committee's control.

A handful of building-specific "red flags" do the most damage to a premium. The good news is that nearly all of them are fixable.

Here's where to start:

• Document every defect, and show a plan. A defects register with photos, dates, quotes and a remediation timeline is exactly what insurers want to see. A documented, funded defect is a manageable risk; an undisclosed one is a claim denial waiting to happen.
• Fund your capital-works plan properly. A thin sinking fund is a red flag in its own right and leaves you reaching for special levies when a defect finally demands action. Consistent contributions compound into a fund that can actually pay for the work.
• Fix what's driving your claims. If water damage keeps recurring, invest in plumbing inspections and waterproofing repairs. A falling claims frequency shows up directly in next year's quote.
• Keep your valuation current. Underinsurance surfaces at the worst possible moment, at claim time. Get a professional building valuation every three to five years.
• Shop the market through a specialist broker. Never auto-renew. A specialist strata broker approaches every underwriting agency, not just the two or three a generalist might. Ask them to explain, in plain English, which part of your increase is market-wide and which part is specific to your building.

Timing matters as much as the actions. Work through this well before the renewal notice lands, not the week it arrives, so a broker can present an insurer with a building that is already managing its risks rather than scrambling to explain them.

How UnitBuddy helps

Most of what insurers reward comes down to one thing: a building that keeps good records and acts on them. That's precisely the gap UnitBuddy is built to close.

UnitBuddy gives your committee a live home for the things that decide your premium. Maintenance schedules so small issues get fixed before they become claims. A 10-year capital-works plan you can actually track and fund. A defects register with photos, dates and documents, so when a broker or insurer asks "what are you doing about it?", the answer is a tidy paper trail rather than a shrug. And benchmarking, so if your premium sits well above comparable buildings, you know it's time to push back.

None of this makes the floods or the construction-cost inflation go away. But it puts your building on the right side of the split that's defining the 2026 market: the well-documented, well-maintained schemes that insurers compete for, rather than the ones they quietly price up and hope to lose.

What is actually inside the premium

A strata premium is not one number. It is a stack.

Reinsurance and natural perils are the part no committee can negotiate away. Flood, cyclone, hail and bushfire costs are spread through the market. A claim-free building in a quiet suburb still pays a share. Location, construction type and height change the load. You can document the building; you cannot repeal the weather.

Attritional claims are the part you can change. Water from bathrooms, balconies and failed membranes dominates everyday strata claims. One leaking shower that is "monitored" for two years is not prudence. It is a future payout plus a loading. Flexi-hose bursts, overflowed washing machines and blocked balcony drains sit in the same bucket.

Defects and cladding sit between the two. Insurers treat unresolved structural or waterproofing defects as claims that have not been lodged yet. An open defects register with no program of work is a pricing fact. A closed register with invoices and engineer sign-off is a different fact.

Sum insured and valuation are where committees accidentally underinsure. A three-year-old valuation in a period of construction inflation means a cheaper premium on a sum that will not rebuild the building. The saving is fictional. Get a current replacement valuation and check whether it includes demolition, professional fees and cost escalation.

Broker, underwriter and excess are the remaining levers. A generalist who places one strata policy a year will not shop this market. A specialist will. Raising the excess on water claims can cut premium if the building can actually fund that excess from the admin fund. Raising it when the admin fund is empty just moves the shock.

What to do 90 days before renewal

Do not open the notice and panic in week one of the new policy.

• Commission or update the valuation if it is stale
• Give the broker the defects register, capital-works plan, claims history and any completed waterproofing or fire work
• Ask for more than one underwriter, in writing
• Disclose known issues. Non-disclosure is how a later claim is denied
• Compare like with like: same sum insured, same flood/storm cover, same machinery breakdown and office-bearers wording
• Put the comparison table in the committee pack, not just the winning invoice

If the increase is driven by one large prior claim, ask what the premium does in year two and three if there is no repeat. Some loadings step down. Some do not unless you ask.

What not to do

Do not switch to a cheaper policy that drops flood, escape-of-water or office-bearers cover without telling owners. A cheap premium that does not respond is a future special levy with a lawyer attached.

Do not hide a known leak until after inception. Do not skip the valuation to "keep the sum down". Do not leave placement to the manager's related broker without recording the commission. The 2025–26 NSW reforms tightened disclosure for a reason.

Shop every year if last year's outcome was poor. Do not shop every year if you have a specialist, a clean file and a competitive quote. Constant churn without a paper trail looks, to the next underwriter, like a building that cannot keep a policy.

Explain the increase to owners in one page

Most owners only see the levy line. Give them four figures: last year's premium, this year's, the sum insured change, and the claims the building made (or did not make). Then one sentence on weather/reinsurance and one on this building (defects, valuation, excess).

If the committee cannot fill that page, the broker has not done the job. Ask again before the AGM, not during it. A 40% rise with no explanation is how a necessary insurance motion fails and the building goes uninsured for a week.

Pay the premium from the administrative fund. It is a recurrent cost, not a capital surprise. If the admin budget was set on last year's premium, pass a correcting contribution or a small special levy for the gap. Raiding the capital works fund to pay insurance is how next year's roof disappears.

If the building has cladding or an open waterproofing brief, say so in the presentation to underwriters, with the program of work and the dates. Surprise at survey is priced as hostility. A dated rectification plan is priced as a building that will still be here next year.

Ask the broker to show the last three years of premium, claims paid, and commission on one line. Owners understand a chart. They do not understand a 40-page schedule of rates.

Office-bearers and voluntary workers cover is cheap relative to a committee dispute. Do not drop it to save a few hundred dollars. Flood and cyclone extensions are not optional because "we are on a hill" if the PDS still maps you into a risk zone. Read the map the underwriter used, not the suburb myth.

A single large water claim can load the premium for three years. That is why the admin-fund rule on small repairs matters. Pay the $2,800 balcony drain from cash. Do not train the underwriter to expect a claim every summer.

If the broker blames "the market" and will not show two other agencies, appoint a second broker for this renewal only. You can go back next year. One stubborn channel is how a 35% rise arrives with no paperwork.

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This article is general information, not financial or legal advice. Strata insurance, building-bond rules and defect regulation vary by state and change over time. Speak to a licensed strata insurance broker and check your state's current requirements before making decisions for your building.

Sources and further reading

The figures and findings in this article are drawn from the following sources, and we credit each for the data referenced above:

• How Do Building Defects Impact Strata Insurance in Australia? (CHU) for defect prevalence, claim-denial mechanics and policy exclusions.
• How Strata Building Defects Are Impacting Your Insurance (Bellrock) for the 85% defect figure and committee remediation steps.
• Strata Insurance Market Outlook 2026 (Resolute Property Protect) for the soft-market outlook and the share of premium driven by claims.
• Strata Insurance in 2026 (Barrack Broking) for the shift away from the post-pandemic hard market.
• Understanding Latent Defects Insurance and the Strata Building Bond (Netstrata) for the 2% to 3% building-bond change from 1 July 2026.
• Biggest Strata Issues for Victoria in 2026 (StrataJem) for the 30-50% Victorian premium increases and the Geelong example.
• 2025 Strata Defects Survey and Replace Flammable Cladding Through Project Remediate (Building Commission NSW) for the defects survey and cladding-remediation figures.

Further reading

• What Does Strata Insurance Cover? The Complete Guide

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