Victorian Consolidated Legislation

Owners Corporations Act 2006 - SECT 59

Reinstatement and replacement insurance

59. Reinstatement and replacement insurance



(1) An owners corporation must take out reinstatement and replacement
insurance for all buildings on the common property in accordance with this
Division.

(2) The insurance required under subsection (1) is insurance for damage to
property under which the owners corporation insures for-

   (a)  the cost necessary to replace, repair or rebuild the property to a
        condition substantially the same, but not better or more extensive
        than its condition when new; and

   (b)  the payment of expenses necessarily and reasonably incurred in the
        removal of debris and the remuneration of architects and other persons
        whose services are necessary, being incidental to the replacement,
        repair or rebuilding of the damaged property.

(3) The owners corporation must ensure that the insurance required under
subsection (1) includes-

   (a)  a provision that the interests of mortgagees are noted; and

   (b)  a provision that a mortgagee whose interest is noted shall be given
        the notices that are required under section 59 of the
        Insurance Contracts Act 1984 of the Commonwealth at the same time that
        those notices are given to the insured; and

   (c)  a provision that the insurer cannot avoid the whole contract for
        breach of a condition of the contract unless the breach is by the
        owners corporation or all lot owners, but the insurer has a right of
        indemnity against those lot owners who breach the contract.