Body Corporate Insurance
What is Body Corporate insurance?
Body Corporate insurance is an essential type of insurance coverage designed for property owners of residential and commercial buildings managed by a Body Corporate or a Sectional Title Body. This insurance covers not only the building but also the fixtures, fittings, and common areas within the complex.
What you should consider?
As owners of units within the complex are represented by the Body Corporate or Sectional Title Body in managing and maintaining the property, it is imperative that they consider taking out Body Corporate insurance to protect their investment and ensure they have adequate coverage in the event of damage or loss.
Therefore, if you own or are considering purchasing a property that is managed by a Body Corporate or Sectional Title Body, you should seriously consider obtaining Body Corporate insurance to safeguard your investment.
Did you know?
If you own a unit in a unit title development, you are a member of the body corporate.
(New Zealand stuff.co.nz/national/crime July 2019)
Estimates there were NZ households at the end of June 2020.
(Statistics NZ 2020)
Total number of households renting their homes increased by in the year to June 2020.
(Statistics NZ 2020)
Types of Body Corporate Insurance Covers
Fixed sum insured
This is the most common type of coverage available. The insurance provider and the client agree on a total sum insured, and in case of damage or destruction to the property, the insurance company will pay to rebuild the house up to the agreed amount.
Indemnity (present day value)
This type of policy provides coverage that is approximately equal to the depreciated replacement cost of the house (excluding the value of the land) after accounting for its age and condition. However, some older homes may not qualify for this type of cover unless they have undergone a certain degree of modernization, which may vary according to local laws and regulations.
Total replacement
Under this policy, the insurance provider undertakes to rebuild or repair the residential or commercial property up to the total number of square meters under insurance cover, including the professional fees and demolition costs involved in the reconstruction process, in case the house is destroyed.
Deductibles and limits of liability
Regardless of the type of coverage a client chooses, there are deductibles and limits of liability (or sum insured) applicable to the payout value.
What can it cover?
Some of the benefits a body corporate insurance policy may include:
| Coverage Type | Description |
|---|---|
| Accidental loss or damage to building and common area contents | Protects against accidental loss or damage to common areas such as floors, walls, ceilings, balconies, gardens, lifts, car parks, pools, spas, and tennis courts, as well as building contents. |
| Improvements installed by lot/unit owners | Covers accidental loss or damage to improvements made by lot/unit owners that were not included in the building valuation. |
| Natural disasters and catastrophic events | Provides cover against damage caused by natural disasters such as earthquakes, landslides, volcanic eruptions, hydrothermal activity, tsunamis, and wildfires. It also covers sudden escalation of building costs following a declared catastrophic event. |
| Legal liability | Indemnifies the Body Corporate as common property owners against legal liability for personal injury or property damage. |
| Protection for office bearers and committee members | Protects office bearers and committee members against legal liability to pay compensation for wrongful acts, errors, or omissions. |
| Body Corporate machinery | Covers unforeseen damage to Body Corporate machinery such as garage motors, air conditioning plant, lifts, etc. |
| Professional costs and legal expenses | Provides cover for professional costs and legal expenses. |
| Loss of income for volunteers | Covers loss of income for volunteers who sustain bodily injury while working on behalf of the Body Corporate. |
| Fraudulent misappropriation | Provides protection against fraudulent misappropriation of Body Corporate funds or property. |
| Workers compensation | Covers workers compensation wherever required or permitted by state law. |
What is usually not covered?
CASE STUDY
Mr. Lee is a resident of Wellington and part of a residential body corporate that represents 120 residential units, including owner-occupied and rented units. Recently, one of his tenants caused damage to the wall and main door due to an altercation with his girlfriend and also broke the bed base. Additionally, the tenant had not paid rent for eight weeks and when they vacated the property, Mr. Lee discovered that some appliances were missing.
Fortunately, Mr. Lee had taken out a Body Corporate insurance policy that covered all the damages caused by the tenant, as well as the costs of missing appliances and loss of rent. The policy also covered the cost of replacing Mr. Lee's furniture.
Thanks to his insurance policy, Mr. Lee was able to recover all the costs and damages and quickly prepare the unit for a new tenant.
Why choose FG Insurance?
- Area Based Replacement Cover for Non-Natural Disaster Damage
- Built-In Price Surge Cover
- Custom Cover to Suit Diverse Needs
- Adjustable Cover Limits
- Optional Cover