Body Corporate Insurance for Apartments and Units in NZ (2026): What It Covers and Your Personal Gaps

What body corporate insurance covers for NZ apartments and units, what you still need personally, how the Unit Titles Act sets the building sum insured, and the underinsurance shortfall risk.

If you own an apartment or a unit-titled flat in New Zealand, the body corporate usually arranges the insurance on the building. That cover is real and important, but it does not stretch over everything you own or everything you could be liable for. Plenty of owners assume "the body corporate has it covered" and find the gaps only at claim time. This article sets out what the principal body corporate policy covers, what it leaves to you, and how the building's sum insured is set under the law.

It is general information, not advice about your situation, but it should help you check your own cover before you ever need it.

What does a body corporate insurance policy actually cover?

TL;DR: A body corporate must insure all buildings and improvements to their full insurable value under section 135(1) of the Unit Titles Act 2010 ¹. That principal policy covers the structure, common areas and original fixtures — but not your contents, your own improvements, your excess, or your personal liability. Multi-unit homes were about 53.5% of new dwellings consented in the year to July 2025 ³, so these gaps now affect a large and growing share of buyers.

The "body corporate" is the legal entity made up of all the owners in a unit-titled development. One of its core duties is insurance. Under section 135(1) of the Unit Titles Act 2010, the body corporate must insure and keep insured all buildings and other improvements on the land to their full insurable value ¹. This is known as the principal insurance policy.

In practice the principal policy is a material-damage policy over the building. It typically covers:

• The structure of the building — foundations, framing, roof, exterior walls and the like.
• Common property such as lobbies, lifts, shared corridors, driveways and shared services.
• The original fixtures and fittings that came with each unit when it was built, to the standard of the original construction.

The body corporate is responsible for insuring all principal and accessory units and the common property. This can only be left to individual owners by special resolution where every unit in the plan is a standalone unit, and even then the body corporate always remains responsible for insuring the common property ⁴. So for a typical apartment block or attached terrace, you do not get to opt out — the building is insured collectively, and you pay your share through your body corporate levies.

What does the body corporate policy NOT cover for you personally?

This is where the gaps sit. The principal policy is built to rebuild the building, not to make you personally whole.

The body corporate policy generally does not cover:

• Your contents — furniture, appliances, clothing, electronics and personal belongings. The Ministry of Housing and Urban Development's guidance is explicit that the principal policy covers the buildings and improvements but does not cover an owner's own belongings, so owners are advised to hold their own contents insurance ⁵.
• Your own improvements — a renovated kitchen, new flooring, a fit-out or any upgrade you have made beyond the original construction standard. The principal policy usually responds only to the original specification.
• Your excess — when a claim is made, an excess applies, and a share of it can land on the owner whose unit is involved (covered further below).
• Your personal liability — for example, if a visitor is injured inside your unit, or water escapes from your unit and damages a neighbour's.
• Loss of rent or temporary accommodation specific to you, depending on how the policy is structured.

In some cases unit owners also choose to hold their own property insurance over their unit on top of the body corporate cover ⁵. Whether that suits you depends on your unit, your improvements and the body corporate's policy wording — it is one of the things worth checking before you buy.

How is the apartment building's sum insured set under the Unit Titles Act?

The Unit Titles Act 2010 sets out the insurance regime for unit-titled buildings in sections 134 to 137. Section 135 requires cover to full insurable value, and section 137 permits indemnity cover only if full replacement cover is not available ².

"Full insurable value" generally means the cost to fully rebuild the building, including demolition, debris removal, professional fees and compliance with current building rules — not the market value of the units, which can be quite different. To set that figure, bodies corporate usually commission a registered valuer to produce an insurance (reinstatement) valuation, and update it periodically as building costs move.

The distinction in section 137 matters. Full replacement cover rebuilds to current standards; indemnity cover only accounts for wear and depreciation and is permitted only where full replacement cover is not available ². If a building is insured on an indemnity basis, owners can face a larger shortfall after a major loss. It is worth knowing which basis your building is on.

What happens if the body corporate is underinsured?

Underinsurance is the central risk, just as it is for a standalone house. If the sum insured is set below the true full rebuild cost, and a major event destroys or badly damages the building, the policy pays up to the insured figure and the owners collectively carry the rest.

For unit owners that shortfall does not disappear — it is shared across the body corporate, usually in proportion to ownership (utility) interests. There is no public top-up that fills the gap above the building's sum insured. Natural Hazards Cover (formerly EQC) sits behind each dwelling for natural-hazard events, but private cover above that still relies on the sum insured being set correctly, which is the same principle that applies to any home (see [natural hazards cover and the cap](natural-hazards-cover-eqc-cap-explained-nz)).

Because the figure is set collectively, you have less individual control over it than a standalone homeowner does. That makes the body corporate's valuation and its renewal practices something to scrutinise before you buy, not after. The same rebuild-cost logic that applies to a house applies here — see [how to set a house sum insured](how-to-set-house-sum-insured-rebuild-cost-nz) for how reinstatement figures are built up.

Recent law changes have strengthened the surrounding disclosure. From 9 May 2024, large unit-title developments (10 or more units) must maintain a long-term maintenance plan covering a 30-year period and review it every three years, and bodies corporate must meet stronger document-disclosure requirements, including providing current insurance policies and annual insurance certificates ⁷. That gives buyers more to work with — but only if you actually read the documents.

Do you still need your own house or contents policy?

For an apartment or attached unit, you usually do not need your own policy over the building structure — that is the body corporate's job under section 135 ¹. What you typically do still need is cover for the things the principal policy leaves out.

Source: Unit Titles Act 2010 s 135; Ministry of Housing and Urban Development, Short Guide to Unit Titles. General principles only — read your body corporate policy and any personal policy wording ¹⁵.

A standalone house and contents policy is not the right product for an apartment, because you would be double-insuring the structure. A contents policy designed for body corporate situations is the more common fit, often with components for your improvements, your share of the excess and your personal liability. General cover principles are set out in [our guide to house insurance](blog-post-house-insurance). The right mix depends on your unit, so this is a point worth advice rather than a rule of thumb.

How do excess and betterment costs get passed to owners?

Two costs commonly surprise apartment owners at claim time: the excess and betterment.

The excess is the first part of any claim that the policy does not pay. On a body corporate policy a claim relating to your unit can mean a share of the excess is passed to you. This is exactly why many unit owner's contents policies include an "excess cover" component — so that share does not come out of your pocket unexpectedly.

Betterment arises when a repair leaves you better off than before — for example, if damaged original fittings can only be replaced with a higher-spec modern equivalent, or if your own upgrades are involved and the principal policy only restores to original standard. The difference can fall to the owner.

There are limits on what a body corporate can pass on, though. A Tenancy Tribunal decision held that additional insurance premiums must be funded by all unit owners in proportion to their ownership interests, rather than recovered from one owner under section 127 ⁶. So while excess and betterment on a specific claim can attach to the owner involved, general premium increases are generally shared across all owners by ownership interest ⁶. The distinction is worth understanding when you review your body corporate's accounts and policy.

What should you check before buying an apartment or unit?

These are things to review, not a recommendation for your situation. They are also the points an adviser would usually walk through with you.

01. Read the body corporate's current insurance policy and certificate. From 9 May 2024 these must be disclosed; confirm the sum insured, the insurer, and the cover basis ⁷.

02. Check whether cover is full replacement or indemnity. Section 137 only allows indemnity where full replacement is unavailable — full replacement is the stronger position ².

03. Look for a recent reinstatement valuation. Confirm the full insurable value reflects today's rebuild cost, not an old figure.

04. Identify what is not covered for you. Your contents, your improvements, your share of any excess and your personal liability typically sit outside the principal policy ⁵.

05. Review the long-term maintenance plan and levies. For developments of 10 or more units a 30-year plan is required; under-funded maintenance can point to future cost pressure ⁷.

06. Read the policy wording, not just the summary. Whether a claim is paid depends on the terms, conditions and exclusions of the specific policy, and on your disclosure.

Smiths Financial does not provide advice on mortgages or property law. This is general information only — for property-specific or legal questions, please consult an appropriately authorised professional, such as a property lawyer who can review the body corporate disclosure documents.

Frequently asked questions

What does body corporate insurance cover in New Zealand? The principal body corporate policy covers the building structure, common property and original fixtures, insured to full insurable value as required by section 135(1) of the Unit Titles Act 2010 ¹. It does not cover an owner's contents, personal improvements, share of the excess, or personal liability ⁵.

Do I still need contents insurance if I own an apartment? Generally yes. The body corporate policy covers the building, but the Ministry of Housing and Urban Development advises owners to hold their own contents insurance because personal belongings are not covered by the principal policy ⁵. Many owners also add cover for their improvements and their share of the excess.

Who is responsible for insuring the building in a unit title development? The body corporate is responsible for insuring all principal and accessory units and the common property. This can only be left to individual owners by special resolution where every unit is standalone, and the body corporate always remains responsible for insuring the common property ⁴.

What happens if the body corporate is underinsured? If the sum insured is below the true rebuild cost, the policy pays up to the insured figure and the owners collectively carry the shortfall, usually in proportion to their ownership interests. Setting cover to full insurable value is a legal requirement under section 135(1), which is why the valuation and renewal practices are worth checking before you buy ¹.

Can the body corporate pass extra insurance costs on to one owner? Generally not for premium increases. A Tenancy Tribunal decision held that additional insurance premiums must be funded by all unit owners in proportion to their ownership interests, rather than recovered from a single owner under section 127 ⁶. A share of the excess or betterment on a specific claim can still attach to the owner involved.

Is the building insured for full replacement or indemnity? It depends on the policy. Section 135 requires cover to full insurable value, and section 137 only permits indemnity cover where full replacement cover is not available ². Full replacement is the stronger position, so it is worth confirming which basis your building is on.

This article is general information only and is not personalised financial advice. It does not take into account your particular financial situation, goals or needs. Before acting, consider whether it's right for you and seek advice tailored to your circumstances. Craig Smith Business Services Ltd (FSP712931), trading as Smiths Financial, holds a Class 2 licence issued by the Financial Markets Authority and is a member of the Financial Dispute Resolution Service (FDRS). Smiths Financial does not provide advice on mortgages or property law. Unit Titles Act insurance requirements are set by legislation and can change; figures are correct as at 6 September 2025. Whether an insurance claim is paid depends on the policy terms, conditions, exclusions, stand-down periods, underwriting and your disclosure — always read the policy wording. Written by Henry Smith, Financial Adviser; reviewed by Craig Smith, Principal Adviser. Last reviewed 6 September 2025.