My body corporate & insurance Guidelines for Insurance and the Body Corporate. Pursuant to Section 135 of the Unit Titles Act 2010 (“UTA”), a body corporate must keep all buildings and other improvements insured to their full insurable value. However, a body corporate may insure for indemnity value if full replacement cover is not available. Most lenders on the market require full replacement cover, while most insurance policies via the body corporate stipulate a replacement value.
This value is assessed on an annual basis together with the risks involved in insuring the building, in particular, the government’s seismic assessment.
Note that in a Pre-Contract Disclosure Statement, full insurance details are not usually available. There may be traces of cost of insurance in the body corporate budget, however policy statements are generally not available. Under the ninth edition of the ADLS Standard Sale and Purchase Agreement, there is unfortunately no provision that enables the proposed purchaser to request the full insurance policy. Furthermore, insurance policy is not part of the additional disclosure package under Section 148 of the UTA.
We therefore highly recommend the proposed purchaser to obtain a copy of the full insurance policy prior to signing the agreement, or as part of any agreed due diligence process.
A practical suggestion is to request a full copy of the insurance policy during the due diligence period from the Vendor, or the Vendor’s agent direct. This can be considered as part of the risk assessment.