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Body Corp Insurance for Unit Title Dwellings
Hello yet again all,
Another issue to contend with.
The town house I am looking at buying, one of two on a unit title, doesn't have shared/common insurance with the other town house as required for a unit title under the unit titles act. Eg the body corporate does not have a common insurance policy for both houses; they're individually insured (I assume the other one is!!) by their current owners. The units share a party wall.
Is this generally a problem, and something that may be an issue should perhaps, one unit catch fire and burn down the other? Or similar scenario?
In these times I am sure that insurance companies are looking to avoid paying up where possible, and I wonder if this would provide another escape clause for them.
If anyone has experience with this I'd be interested to hear.
Cheers, all the best
Last edited by Dugster; 13-05-2012 at 12:15 AM.
The insurance coys shouldn't suceed in declining to pay out if you made full disclosure and they accepted the situation, but they might try to, which is in itself more trouble than it is worth. You bank, however, is unlikely to approve separate insurance.
Separate insurance for unit titles is a bad idea unless the units are physically separated (it's contrary to the Act as you note in all circumstances, but at least when the buildings are apart it is defensible on practical grounds). The reason is as you noted....if one burns down, probably both burn down. You can have your own separate contents policies, but the building one should be an overall policy with your separate mortgagee's interests noted against each unit.
In short, what you describe is an issue and needs to be corrected. Your lawyer, in issuing a solicitors certificate, will be required to certify various matters about insurance, and they won't be able to do so if insurance is arranged separately. They will then have to bring the issue to bank attention, and they probably won't lend unless the insurance is put in place by the body corporate.
There's always something!
All the best,
Sorry Ivan, on last thing.
Assuming the bank were aware, and willing to lend, what would be your comfort levels with this insurance arrangement then?
Thanks, appreciate your help!
Well, the bank is half the equation - the insurance company is the other. If they knew that there are two units side by side, and that one burning down takes out the other, and were ok with it, then great. There are plenty of buildings with party walls that have separate insurance, so its not a problem in principle. You just need to be very very sure the insurance coy knows what the situation and agrees to cover anyway so they can't decline for inadequate disclosure.
Here's a potential problem: if you arrange insurance through a broker they may at some future date all but automatically switch you to another insurance provider that offers a cheaper premium. It would be all too easy at that point to forget proper disclosure.
Balance that against the irritation of having to go halves in insurance with your neighbour, especially if they don't pay....hmmm. Ultimately it's your call.
Two other things to consider:
1. The Body Corporate insurance for the two units together would I believe usually be cheaper than for the two individually, so there is an incentive there; and
2. This will probably be an issue when you come to sell.
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