30/09/2022
Back in January 2021 in an article published in STUFF, the CEO of the Insurance Council of NZ warned buyers of the need to check on the insurance arrangements that are in place in multi-unit complexes where there is no body corporate in place.
This warning was quite valid, but we have just uncovered a situation where AMI Insurance has issued policies in relation to the dwelling in a body corporate complex and after making enquiries the Chairperson found out that the policies do not cover the common property or infrastructure.
Fortunately, there has been no need to claim for damage occurring to the common property or infrastructure over the years, but it is quite disturbing in my opinion that AMI has collected premiums for these policies for many years and failed to make it clear that the common property and infrastructure is not covered. Furthermore, they have covered the garages without even realising that the exterior of the garage walls from the mid-point out is actually common property - it makes me wonder what affect this may have had on any claim made by owners if theses garages were damaged or destroyed?
We are trying to assist the owners of this small complex to 'right the ship', so to speak, after they innocently failed to ensure that the body corporate was operating in accordance with the Unit Titles Act over the last 4 decades, this insurance anomaly is just one of the many issues that needs to be tidied up.
We believe that it is totally unacceptable that any insurer is issuing policies for units in bodies corporate and failing to make it clear that a standard residential policy does not cover the common property or infrastructure, and thus exposing the owners and their mortgagees to an unacceptable level of risk in relation to that which is not covered by the policies they issue.
It is even more galling that AMI apparently have a 'Body Corporate' team and that they haven't demonstrated the necessary level of knowledge, and clearly failed to make adequate enquiry of the nature of the complex and governance structures.
Furthermore, trying to contact them and have these issues discussed in writing so that it is on the record is almost impossible as their system is not set up to deal with a body corporate set up and they are still asking for the details of the 'secretary' which is somewhat amusing given that the statutory role of the secretary was removed when the Unit Titles Act was amended in 2010.
So, the 'Hidden Risk' that Tim Grafton talks about in the STUFF article is equally applicable to complexes that DO have a body corporate, but that it is dysfunctional or has at least only placed insurance with an insurer issuing standard residential home and contents policies.
Do your due diligence when buying in any multi-unit complex!
