Best Home Insurance for Units & Apartments: What to Consider

House hunting is so emotionally fraught and expensive, arranging home insurance can become a secondary consideration. However, without insurance, no lender is going to agree to a mortgage. And if you’re looking for a unit or apartment, your insurance needs are further complicated. So when purchasing the best home insurance for a unit or apartment, what do you need to consider? Canstar explains…

Best Home Insurance for Units & Apartments: What to Consider. What we cover in this article:

• Units & apartments with body corporate
• Units & apartments without body corporate
• Townhouses, duplexes and other shared properties
• Earthquake prone buildings

Units & apartments with body corporate

If you buy a flat or apartment in a building with multiple owners, it will likely fall under unit title ownership. This comes with a body corporate made up of the other owners. The body corporate is responsible for the maintenance and running of the building and grounds, including insurance cover.

Before buying, it’s a good idea to thoroughly check every aspect of the building’s body corporate. Talk to residents, check maintenance plans, go back over old minutes from meetings from the past couple of years. And check what’s covered by the building’s insurance policy. Watertightness and earthquake resilience are huge issues, so investigate any possible problems before you sign on the dotted line.

It’s the responsibility of a body corporate to insure all individual units in its building. This covers structural things, such as walls, windows, ceilings and floors, as well as all hard-wired and hard-plumbed appliances, think boilers and aircon.

It also covers the communal areas outside your apartment, such as gardens, pools, gyms, etc. And it should also include liability insurance, in case of an injury on common property. The cost of this insurance is passed to residents as part of their body corporate fees.

Personal possession cover

While body corporate fees will ensure the building is covered, they won’t cover contents and personal possessions. This won’t affect your ability to secure finance, but don’t assume your possessions will be covered once you move it. You must organise your own cover for your unit’s contents.

When buying any property, it’s a good idea to get a ‘subject to insurance’ clause inserted into your sale and purchase agreement. But it’s doubly important when buying property with a unit title.

The clause will give you, and your lawyers, plenty of time to investigate thoroughly all aspects of the building’s insurance cover, and allow you to pull out from the deal, or renegotiate, should you discover any problems.

Units & apartments without body corporate

This where things can get slightly more complicated. Not all blocks of units or apartments have a body corporate committee.

Under the Unit Titles Act, all unit titled properties, no matter the size of the development, fall under the same rules. However, any development with nine or fewer units doesn’t have to have an actual body corporate committee. But while there might not be an actual committee, all residents must get together to ensure that the development is insured under one insurance policy, with the levies split between owners.

Before buying any unit title, even if there’s no body corporate committee, it’s essential to do your homework to ensure that the development’s residents have the correct insurance cover in place.

Townhouses, duplexes and other shared properties

If your property is joined to another one in any way, or shares a right of way, once again you need to pay special attention to your insurance needs.

Some types of shared property ownership arrangements include:

• Fee-simple, you own your unit and land, but share a common wall or roof with a neighbour
• Share an easement – this could be a driveway or access road, for example

These are considerations that apply to many duplexes or semi-detached properties. And the rules surrounding them can be very complicated, especially in relation to easements. So before purchasing any property, it’s important to obtain expert legal advice about your insurance obligations.

Earthquake prone buildings

When hunting for a house or apartment in an earthquake-prone area, you need to consider how well they would stand up to a shake. And apartment buyers need to exercise even more caution.

Remedial strengthening work is very expensive and, despite the government offering some financial assistance for private owner-occupiers, the costs can still be crippling. A first stop if you’re looking to buy a specific apartment or unit should be the register of earthquake-prone buildings, which will instantly raise any red flags.

About the author of this page

This report was reviewed by Canstar’s Editor, Bruce Pitchers. Bruce has three decades’ experience as a journalist and has worked for major media companies in the UK and Australasia, including ACP, Bauer Media Group, Fairfax, Pacific Magazines, News Corp and TVNZ. Prior to Canstar, he worked as a freelancer, including for The Australian Financial Review, the NZ Financial Markets Authority, and for real estate companies on both sides of the Tasman.