A strata property in Victoria holds a comprehensive general liability insurance policy with limits of $5,000,000 per occurrence. A visitor slips on ice on a common walkway, resulting in severe injuries and a lawsuit against the strata corporation for $3,000,000 in damages. The strata corporation's legal counsel advises that the strata is likely liable. What role does the strata's liability insurance play in this scenario?

Question: A strata property in Victoria holds a comprehensive general liability insurance policy with limits of $5,000,000 per occurrence. A visitor slips on ice on a common walkway, resulting in severe injuries and a lawsuit against the strata corporation for $3,000,000 in damages. The strata corporation's legal counsel advises that the strata is likely liable. What role does the strata's liability insurance play in this scenario?

Answer options:

• It will cover the legal fees for the strata corporation but not the settlement or judgment amount. ✅ It will cover the settlement or judgment amount, up to $5,000,000, and typically also cover legal defence costs.
• It will only cover damages if the incident occurred within an owner's private strata lot.
• It requires the strata corporation to pay the first $5,000,000 before the insurance policy is activated.

Correct answer: It will cover the settlement or judgment amount, up to $5,000,000, and typically also cover legal defence costs.

Explanation: Liability insurance (specifically Section 150(1)(a) of the Strata Property Act regarding general liability) covers the strata corporation for claims arising from injury or damage to persons or property on common property and typically includes coverage for legal defense costs and any settlement or judgment amount up to the policy limit.