Insurance and Strata Information

How Does Your Cladding Affect Your Premiums?

Buildings with combustible materials can significantly affect your insurance.

Whether building in rural or urban areas, on high rise residential or commercial buildings or on freestanding homes in bushfire areas, it is important to understand how your choice of building materials may affect premiums and policies.

The two highest-risk forms of combustible cladding are:

  • Aluminium Composite Panels (ACPs) with a polyethylene core

  • Expanded Polystyrene (EPS) panels

Because of the deadly fires caused by these types of cladding, insurance policies for buildings with cladding have changed recently. With strata insurance and professional indemnity insurance being impacted, this has caused what some people have termed the ‘cladding insurance crisis.’

Other cladding materials, such as timber or wood-plastic composites, may be a lower risk but still may be excluded from insurance policies on some building, as they are still combustible.

Sources:

The Senate Economics References Committee, 2017. Non-Conforming Building Products: Interim Report: Aluminium Composite Cladding. Commonwealth of Australia, Australia. 

 

How Does Combustible Cladding Impact Strata Insurance?

Combustible cladding fires have changed the way we look at building fires. Because combustible cladding can contribute to blazes that spread up the outside of a building, and are more difficult to contain, strata insurers consider buildings with flammable cladding ‘risky’ to insure.

Since the Grenfell fire in the UK in 2017, changes to strata insurance renewals have meant that homeowners in apartment buildings saw their excesses increase significantly. Some homeowners have found their insurers applying a ‘combustible cladding excess’ of over $100 000 to their buildings – even if the cladding used on the building was not combustible. In some cases, even a letter from the building developer claiming the building has no combustible materials and presents no undue fire risk is not enough to escape the devastatingly high excess premiums. Some strata insurance companies are also imposing insurance cover exclusions to buildings with cladding, or refusing to provide strata insurance to buildings with cladding at all.

To avoid paying high excesses for cladding, you will need to provide your strata insurer with:

  • A copy of the building plans with the clad areas labelled

  • What percentage of your building has cladding on it

  • Details on how the cladding has been installed

  • The type of cladding used

  • Whether your property has sprinklers and where they are installed

  • Info on any commercial tenants in the building

  • Info on any monitored detection of common areas

Some strata insurers are satisfied if cladding products are compliant with Australian Standard AS 1530.1.

Sources:

Branko Miletic, 2019. Insurance Crisis Hits Australian Construction Hard. Architecture and Design, Australia.

Look Up Strata, 2018.VIC: How to Avoid Combustible Cladding Excess in Your Insurance Renewal. LookUpStrata, Australia.

CRM Brokers, 2020. Regulation for Cladding. CRM Brokers, Australia.

 

How is bushfire home insurance affected by cladding?

For houses built in bushfire zones, it is important to ensure bushfire home insurance cover is enough to completely rebuild if necessary. Buildings made from combustible materials such as timber cladding may not be fully covered under bushfire insurance premiums and insurance payouts for these buildings may not be enough to rebuild after a devastating fire.

Australian Standard AS 3959 outlines the requirements for building in bushfire zones, dividing different bushfire prone areas into different BAL ratings. The higher the BAL rating, the higher the insurance premiums on that building and the stricter the building requirements on what materials can be used – including cladding. Buildings with combustible cladding in high-risk areas, such as BAL 40 or BAL FZ may not be covered under bushfire insurance premiums. Even buildings with bushfire-resisting timbers in BAL 40 or BAL FZ are not covered, as these BAL ratings require non-combustible materials only. 

Source: Elizabeth Evatt Community Legal Centre, 2015. Bushfires and Insurance- What You Need to Know.  EELC, Blue Mountains and Lithgow , Australia.

Fire Safe Cladding: The Low-Risk Cladding Option

Fire Safe Cladding is the non-combustible cladding option ideal for making your buildings safer. 

Fire Safe Cladding products are:

  • Made of 100% solid aluminium – no flammable chemicals or plastics in sight

  • Tested to Australian Standards and compliant with the NCC

  • Suitable for use in bushfire zones

  • Suitable for use on high rise residential and commercial buildings

  • Finished with a durable PowderShield™  coating that will not burn or spread flame

Installing Fire Safe Cladding on high rise residential and commercial buildings will make your building project lower risk, reducing your strata insurance premium and reducing the risk of exclusions to your professional indemnity insurance policy. As FSC products can be used in bushfire areas, they can help you achieve compliance with bushfire home insurance policies.

To find out more about FSC products, the low-risk option for all fire-related insurance, contact us.

Fire Safe Cladding Compliance

Fire Rated   Fire Rated Products

Eco Friendly   Australian Made & Owned
Proven   Sustainable Choice
Download Brochure

    Download Brochure
    Customer Type

    Download Brochure

      Download Brochure
      Customer Type

      Information
      Latest Blogs
      Join Our Newsletter

      Copyright 2024 © Fire Safe Cladding

      Fire Safe Cladding products are proudly produced by DECO Australia Pty Ltd