Multi-Unit Insurance Warning

February 2021

Read Time: 3 Minutes   

Insurance Warning - Buying in a Multi-Unit Dwelling That Doesn’t Have a Body Corporate

Buying a unit in a multi-unit dwelling that doesn’t have a body corporate could be risky, according to The Insurance Council of New Zealand. Chief Executive of the Council, Tim Grafton, has warned that insurers may not provide insurance cover for one unit if other units are uninsured or have different levels of cover. 

Benefits of a Body Corporate 

While body corporates may seem to be an added expense for buyers, they also offer peace of mind, as they provide insurance cover for an entire building.

The Council has warned that there has been an increasing number of multi-unit dwellings without body corporates on the market recently and these can look attractive to buyers. Body corporates charge levies to their members which pay for keeping the common property and building in good order, but these levies also ensure all the buildings and other improvements on the land (excluding contents) are covered for their full insurable value.

Body corporates have the advantage that they are often able to secure a better rate of insurance for owners. As body corporates are buying insurance for a whole block they are essentially bulk buying the insurance for all the owners, which is often cheaper than each individual owner insuring their own property. 

Without comprehensive cover, unit owners run the risk of finding out they are not fully covered for repair work after a fire, an earthquake or a leak, Grafton is reported as saying. 

Victor Jamieson, General Manager of Community Living Management at Crockers, noted, “We know from our own experience with clients that managing a remedial process after a significant loss event like an earthquake or fire is complicated.  Adding the need to co-ordinate multiple insurance companies with differing policy wordings and coverage to that mix – or worse still, uninsured properties - significantly increases the challenge”.   

Advice For Buyers 

Buyers who are looking to purchase a multi-unit dwelling without a body corporate are advised to check that they are able to insure the property to the required level before going unconditional. Buyers could also insert a ‘subject to insurance’ clause into any sale and purchase agreement before it is signed. 

In some cases, insurance companies will not agree to insure only one unit in a multi-unit dwelling.

Body Corporate Lite - Other Forms of Community Living Entity  

Many developments that aren’t unit-titled and therefore don’t have a body corporate still have some communal facilities. Sometimes these are managed by a Resident’s Society structure – an incorporated society, where membership is enforced through an ‘encumbrance’ on the title of the property. Crockers provides management services to a number of these sorts of entities, as well as to complexes on cross-lease titles, which share common building elements like walls, driveways and the roof. Through the scale of our client book, we have been able to negotiate superior insurance coverage and conditions for our clients through the Orion package. We are able to extend the coverage of this policy to most of our client resident’s societies, cross leases and even single-owner complexes under certain conditions.

For more information, see the Insurance Council of New Zealand’s guide here, or contact our Body Corp Community Living experts on 09 968 3311 or email

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