Are you buying a new home attached to others? Is it being sold without a body-corporate to reduce costs and issues? The Insurance Council of New Zealand is urging all potential or existing owners of multi-unit property to check they can adequately insure their property.

“If a unit is attached to other units and doesn’t have a body corporate structure in place, many insurers may not provide insurance because of complexities that can arise at claim time if not all units are insured or if they have different levels of cover from different insurers,” says Tim Grafton, Chief Executive ICNZ.

“Owning your own home is increasingly difficult for New Zealanders and we want to ensure buyers aren’t tripped up by steps to make properties appear more affordable when they could actually cause more expense in the future.

“With high-density housing one of the solutions to address New Zealand’s housing availability and affordability it is critical that property owners are able to appropriately protect their assets. We encourage people to talk to an insurer early on so they can help them understand the insurance that is available or the questions they may need to ask before purchasing.”

While body corporates can be seen as adding extra cost and administration for owners, they also offer a single point of insurance for the entire building, including units, shared spaces and common property. Critically this ensures all owners have insurance in place, with one insurer, meaning claims can be handled simply and efficiently.

However, there can be gaps in cover for multi-units with shared spaces and common property often not covered by insurance, where more than one insurer is involved.

“Ultimately it can lead to a really nasty experience for owners – especially following a significant event that causes wide damage that isn’t insured.

“Uninsured or underinsured units can cause repair delays, impacting on everyone’s ability to pick up the pieces and get back to normal.”

ICNZ says that if you’re looking to buy within a multi-unit building, a multi-unit complex (multiple buildings), or a property that is attached to others, be sure to tell your insurer before you go unconditional. “This means you can have a robust conversation about the type of property and what level of cover the insurer may offer to best to meet your needs – enabling you to make an informed decision to proceed with the purchase or not, and avoid possible pitfalls,” says Mr Grafton.

“Don’t get caught up in sales pitch from developers or agents. Properties are sometimes marketed as being BC free to save owners time and money, but the ultimate outcome is that it won’t!”

To help buyers and homeowners understand more about purchasing home insurance in a multi-unit building ICNZ has developed a helpful consumer guide – Purchasing home insurance in a multi-unit building.

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