What is Body Corporate Insurance?

Body corporate insurance is a comprehensive property insurance policy required by the Unit Titles Act 2010 that covers the building structure, common areas, and shared facilities of multi-unit developments in New Zealand. It protects against damage from fire, natural disasters, and third-party liability claims.

In New Zealand, when you own a unit in an apartment building, townhouse complex, or any multi-unit development, you automatically become a member of the body corporate (also called an owners' corporation). This body corporate is legally required to maintain insurance that protects the entire building and its common areas.

Body corporate insurance is fundamentally different from the contents insurance you might have for your personal belongings. While contents insurance covers items inside your unit, body corporate insurance covers:

  • The physical building structure — walls, roof, foundations, floors
  • Common areas — lobbies, hallways, stairwells, lifts
  • Shared facilities — swimming pools, gyms, gardens, car parks
  • Building services — plumbing, electrical systems, fire safety equipment
  • Liability — protection if someone is injured in common areas

Key Point

Body corporate insurance protects the building itself, not the contents of individual units. Unit owners still need their own contents insurance to cover personal belongings, furniture, and any improvements made inside their units.

Legal Requirements Under the Unit Titles Act 2010

Body corporate insurance isn't optional in New Zealand — it's a legal requirement. The Unit Titles Act 2010 sets out clear obligations for body corporates regarding insurance.

Section 135: Mandatory Insurance

Under Section 135 of the Unit Titles Act 2010, every body corporate must:

  1. Keep the buildings and common property insured to their full insurable value
  2. Maintain coverage against loss or damage by fire and any other risks the body corporate considers necessary
  3. Hold public liability insurance for at least $5 million (recommended $10-20 million)

What "Full Insurable Value" Means

The Act requires buildings to be insured for their full replacement value, not market value or rateable value. This is the cost to completely rebuild the building to its current standard if it were totally destroyed.

Full replacement value typically includes:

  • Demolition and debris removal costs
  • Professional fees (architects, engineers, surveyors)
  • Building consent and compliance costs
  • Construction costs at current prices
  • Inflation during the rebuild period

Underinsurance Risk

Many body corporates are underinsured without realising it. Construction costs have increased significantly since 2020, and sum insured values should be reviewed annually. If you're underinsured and make a claim, you may receive a proportionally reduced payout (this is called "averaging").

Committee Member Liability

Committee members have a duty to ensure adequate insurance is maintained. If they fail in this duty and the body corporate suffers a loss, committee members could potentially be held personally liable. This is why many policies also include committee members' liability cover.

What Does Body Corporate Insurance Cover?

A comprehensive body corporate insurance policy typically covers the following:

1. Material Damage

This is the core coverage protecting the physical building against:

  • Fire, smoke, and explosion
  • Storm, flood, and water damage
  • Earthquake, volcanic eruption, tsunami
  • Lightning and electrical surge
  • Impact damage (vehicles, aircraft, falling trees)
  • Theft, vandalism, and malicious damage
  • Burst pipes and water tank overflow
  • Subsidence and landslip

2. Common Area Contents

Items in shared spaces such as:

  • Lobby furniture and fixtures
  • Gym equipment
  • Pool equipment and furniture
  • Garden tools and maintenance equipment
  • Fire extinguishers and safety equipment

3. Public Liability

Protection if someone is injured or their property is damaged in common areas. Minimum recommended cover is $10-20 million. This covers:

  • Visitor injuries in common areas
  • Contractor injuries during maintenance
  • Damage to neighbouring properties
  • Legal defence costs

4. Statutory Liability

Cover for fines and penalties under legislation such as:

  • Health and Safety at Work Act 2015
  • Resource Management Act 1991
  • Building Act 2004

5. Business Interruption / Loss of Rent

If units become uninhabitable due to an insured event, this covers:

  • Lost rental income for investor owners
  • Additional living expenses for owner-occupiers
  • Body corporate levies during the repair period

What's NOT Covered by Body Corporate Insurance

Understanding exclusions is just as important as knowing what's covered. Body corporate insurance typically does NOT cover:

Personal Contents

Furniture, appliances, clothing, electronics, and personal belongings inside individual units

Unit Improvements

Renovations, upgrades, or alterations made by unit owners (new kitchen, bathroom upgrades, flooring)

Gradual Damage

Wear and tear, gradual deterioration, rot, mould from ongoing moisture issues

Pre-existing Defects

Building defects that existed before the policy started, including weathertightness issues

Maintenance Issues

Damage resulting from lack of maintenance or failure to repair known problems

Intentional Damage

Damage caused deliberately by the body corporate or unit owners

Unit Owners Need Their Own Insurance

Every unit owner should have their own contents insurance to cover personal belongings and a unit owner's extension to cover improvements made to their unit. Don't assume body corporate insurance covers everything inside your unit.

Types of Body Corporate Insurance Cover

Replacement Value vs Indemnity Value

Replacement Value Indemnity Value
Pays to rebuild to current standards Pays current value minus depreciation
More expensive premiums Cheaper premiums
Recommended for most buildings May suit older buildings being wound up
Required under Unit Titles Act 2010 May not meet legal requirements

Standard vs Comprehensive Cover

Standard cover protects against named perils only (fire, storm, theft, etc.). Comprehensive cover (also called "all risks") covers any sudden accidental damage unless specifically excluded. Comprehensive cover is more expensive but provides broader protection.

Optional Extensions

Many insurers offer optional add-ons:

  • Committee Members' Liability — Personal protection for committee members
  • Fidelity Cover — Protection against theft by employees or committee members
  • Glass Cover — For buildings with extensive glazing
  • Machinery Breakdown — For lifts, HVAC systems, and plant
  • Contract Works — Cover during major renovations

How Much Does Body Corporate Insurance Cost?

Body corporate insurance costs vary significantly depending on many factors. Here's a general guide to what you might expect to pay in 2026:

Building Type Units Typical Annual Cost Per Unit (approx)
Small Townhouse Complex 2-6 $3,000 - $8,000 $800 - $1,500
Medium Townhouse Complex 6-15 $8,000 - $20,000 $800 - $1,400
Low-Rise Apartments 10-30 $15,000 - $45,000 $1,000 - $2,000
Mid-Rise Apartments 30-60 $40,000 - $100,000 $1,200 - $2,500
High-Rise Apartments 60+ $80,000 - $250,000+ $1,500 - $4,000+

Factors Affecting Premiums

Location

Wellington and Christchurch have higher earthquake risk, leading to higher premiums. Auckland may have higher flood risk in some areas.

Building Age

Older buildings (pre-1990) often cost more to insure due to higher claims risk and potential weathertightness issues.

Construction Type

Concrete buildings are generally cheaper to insure than timber. Monolithic cladding can significantly increase premiums.

Claims History

Buildings with previous claims may face higher premiums or difficulty obtaining cover.

Sum Insured

Higher replacement values mean higher premiums. Ensure your sum insured is accurate — neither too high nor too low.

Excess Level

Choosing a higher excess can reduce premiums, but means more out-of-pocket costs when claiming.

For detailed cost information, see our Body Corporate Insurance Cost Guide.

Earthquake Coverage in New Zealand

Earthquake insurance is a critical consideration for New Zealand body corporates, given our location on the Pacific Ring of Fire.

EQC Cover

The Earthquake Commission (EQC) provides the first layer of natural disaster cover:

  • Building cap: $300,000 + GST per dwelling
  • Covered events: Earthquake, natural landslip, volcanic eruption, hydrothermal activity, tsunami
  • Excess: Currently $500 per event per dwelling

Important: EQC Has Limits

For most body corporates, EQC cover is insufficient. If your building's replacement value is $10 million and there are 30 units, EQC provides maximum cover of $9 million (30 × $300,000). Any shortfall must be covered by private insurance.

Private Earthquake Insurance

Private insurers provide cover above the EQC cap. This is essential for:

  • Buildings where EQC cap is less than replacement value
  • Common areas that exceed the per-dwelling cap
  • Higher excesses may apply (often $10,000-$50,000+ for earthquake)

Regional Considerations

Wellington: Higher earthquake risk means higher premiums and potentially limited insurer availability. Some buildings struggle to get cover at all.

Christchurch: Post-earthquake, many buildings face higher premiums or exclusions for pre-existing damage. TC3 land can be particularly challenging.

Auckland: Generally lower earthquake premiums, but volcanic risk is a consideration.

How to Choose the Right Policy

Step 1: Assess Your Building's Needs

  • Get an updated sum insured valuation (recommended every 2-3 years)
  • Review your building's specific risks (location, age, construction type)
  • Consider any planned renovations or upgrades
  • Check compliance with building warrant of fitness requirements

Step 2: Compare Multiple Quotes

Don't just accept the renewal quote. Get at least 3 quotes from different insurers or brokers. Use a comparison service like Body Corporate Insurance NZ to streamline this process.

Step 3: Look Beyond Price

The cheapest policy isn't always the best. Consider:

  • Coverage breadth — What's included and excluded?
  • Excess levels — What do you pay before insurance kicks in?
  • Claims service — How easy is it to claim? What's the insurer's reputation?
  • Insurer financial strength — Can they pay claims? Check their rating.

Step 4: Use a Specialist Broker

Body corporate insurance is complex. A specialist insurance broker can:

  • Access policies not available direct to the public
  • Negotiate better terms on your behalf
  • Provide advice on appropriate cover levels
  • Assist with claims when they arise

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Making a Body Corporate Insurance Claim

Step-by-Step Claims Process

  1. Report the Damage Immediately

    Contact your body corporate manager or committee chairperson as soon as damage occurs. Time limits often apply for reporting claims.

  2. Document Everything

    Take photos and videos of the damage. Keep records of any emergency repairs. Save receipts for all expenses.

  3. Prevent Further Damage

    Take reasonable steps to prevent additional damage (e.g., tarp a damaged roof, turn off water). These costs are usually covered.

  4. Lodge the Claim

    The body corporate manager or committee will lodge the claim with the insurer. For earthquake damage, the claim goes to EQC first.

  5. Assessor Visit

    The insurer will send an assessor to inspect the damage. Be present if possible to explain what happened.

  6. Settlement

    Once approved, the insurer pays the claim (minus any excess). Repairs can then proceed.

Common Claim Scenarios

  • Water damage: Burst pipes, leaking roofs, flooding
  • Fire damage: Kitchen fires, electrical faults
  • Storm damage: Wind, hail, falling trees
  • Vandalism: Graffiti, broken windows, damage to common areas
  • Liability claims: Visitor injuries, contractor accidents

Frequently Asked Questions

What is body corporate insurance?

Body corporate insurance is a comprehensive property insurance policy required by the Unit Titles Act 2010 that covers the building structure, common areas, and shared facilities of multi-unit developments in New Zealand. It protects against damage from fire, natural disasters, and third-party liability claims.

Is body corporate insurance mandatory in New Zealand?

Yes. Under Section 135 of the Unit Titles Act 2010, body corporates must insure the building and common property for full replacement value. Failure to maintain adequate insurance can expose committee members to personal liability.

What does body corporate insurance cover?

Body corporate insurance typically covers: building structure (walls, roof, foundations), common areas (lobbies, hallways, stairwells), shared facilities (pools, gyms, lifts), fixtures and fittings in common areas, public liability, and natural disaster damage including earthquake and flood.

How much does body corporate insurance cost?

Costs vary significantly based on building size, location, age, and construction type. Small complexes (2-10 units) typically pay $3,000-$10,000 annually. Medium buildings (10-30 units) pay $10,000-$40,000. Large high-rise buildings (30+ units) can pay $40,000-$200,000+ per year.

What's the difference between body corporate insurance and contents insurance?

Body corporate insurance covers the building structure and common areas, while contents insurance covers personal belongings inside individual units. Unit owners need their own contents insurance as body corporate insurance does not cover personal property, furniture, or improvements made inside units.

Does body corporate insurance cover earthquake damage?

Yes, but with limitations. EQC provides the first $300,000 + GST of building cover for earthquake damage. Private insurers provide cover above this cap. Most body corporate policies include natural disaster coverage, but excesses can be high.

Who is responsible for arranging body corporate insurance?

The body corporate committee is responsible for arranging and maintaining insurance. This duty is outlined in the Unit Titles Act 2010. Committee members can be held personally liable if they fail to maintain adequate insurance coverage.

Can individual unit owners opt out of body corporate insurance?

No. Body corporate insurance is mandatory and covers the entire building. Individual unit owners cannot opt out. The cost is shared among all unit owners according to their ownership interest (usually based on unit entitlements).

What happens if a body corporate doesn't have insurance?

Operating without insurance is illegal under the Unit Titles Act 2010. If damage occurs, unit owners would be personally liable for repair costs. Committee members could face legal action for breach of duty. Banks may call in mortgages as loan conditions typically require adequate insurance.

How do I make a claim on body corporate insurance?

Contact your body corporate manager or committee chairperson immediately. Document the damage with photos and written descriptions. The committee or manager will lodge the claim with the insurer. For earthquake damage, claims go through EQC first.

How often should body corporate insurance be reviewed?

At minimum annually, before each renewal. A full sum insured valuation should be conducted every 2-3 years, or after any significant building changes or construction cost increases.

Can the body corporate change insurers?

Yes. The body corporate can switch insurers at any renewal date. It's good practice to get multiple quotes each year to ensure you're getting competitive pricing and appropriate cover.

Get Expert Help with Your Body Corporate Insurance

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