While unit title properties tend to be insured together, many modern townhouse developments are created as fee-simple (freehold) dwellings, meaning the Unit Titles Act doesn't apply, and each unit is responsible for arranging its own insurance.

So consider this question: What happens if the townhouses, which are each insured separately, have shared walls and are damaged by fire, flood, or earthquake? You might predict that the insurance companies take some time negotiating and deciding which company is responsible for what proportion of repairs, possibly complicating and delaying the rebuild process. If multiple insurers each form the view that they are not responsible for a particular part of a repair, you could face an unnecessary fight to complete repairs.

In some instances, a Body Corporate might resolve to insure units separately, although most Body Corporates will usually only agree to do this where the units are stand alone (i.e. do not have shared walls).

Our advice? Speak to your neighbours and agree to use the same insurance company to insure all units. If the units are then damaged, the sole insurer obviously can't argue with themselves about which proportion of the repair they are responsible for, since they insure all units.

If you have any questions about this post, or any related matter - speak to one of our property law specialists today: info@iclaw.com