QLD Townhouse
Complex Insurance

How do I get insurance for an entire townhouse complex?

Insurance for a complex of three or more dwellings can be slightly more difficult to get than insurance for your average investment property. This can be due to a number of factors, including but not limited to the building sum insured, the number of units, the complex footprint, flood mapping, etc. A specialist landlord insurance brokerage like Australian Landlord Insurance has access to a number of market leading products that can provide cover for a complex of almost any size.

Recently, we placed a policy for a townhouse complex of 7 townhouses in Queensland and were able to help one of our clients with a comprehensive policy covering rental default, tenant damage, and more. Below are some of the most important things to check when choosing the right policy for your complex.

Landlord and Building Insurance or Strata Insurance?

The first thing to check when insuring your complex is whether or not there is a registered strata or body corporate in place. A Community Titles Scheme (CTS), an Owners Corporation, or a Body Corporate may be used to describe this. If there is one in place, you must have a strata insurance policy instead of a landlord and building policy.

A strata insurance policy is a specialised policy that includes coverage for what the complex itself owns rather than the individual lot owners. It is important to understand that the body corporate itself owns the building and its contents, even if there is only one owner of all the individual lots that comprise the body corporate or complex.

If there is no body corporate in place you can proceed with a landlord & building policy.

Check Your Building and Contents Sum Insured

One of the most important parts of any building policy is ensuring the sum insured is sufficient to replace the building or buildings in today’s building market. As you are likely aware, the construction industry has experienced some of the steepest increases in material and labour costs in decades over the last three years. If the building sum insured is insufficient to rebuild the complex again, you will be forced to supplement it with your own money to make up the difference.

Australian Landlord Insurance has access to tools like Corelogic’s Cordell Sum Sure as well as working with quantity and building surveyors to accurately assess the replacement cost of a building. Please speak with one of our qualified brokers about this.

Rental Default and Loss of Rent

An important question to ask is whether you can still afford to pay your mortgage if there is no rental income from your properties. Most landlords could survive a month or two, but not if the entire complex was unable to be rented for an extended period of time. This type of insurance falls under two categories: Rental Default or Loss of Rent.

Rental Default cover responds to a tenant not paying their required rental amount and the property manager/owner is forced to apply to the local tribunal to have the tenant removed or the property is abandoned. This cover gives the landlord peace of mind by paying the rental arrears of the tenant so there is still rental income for the property. It is important to note that claiming the coverage requires the owner or the property manager to follow industry standard practices, including but not limited to arrears reminders, breach notices, notices to leave, etc. The policy will specify a maximum dollar amount for which you are covered in the event of a Rental Default on your schedule.

Loss of Rent cover responds when damage occurs and the property is uninhabitable. For example, a storm causes damage to the roof of a property, and due to safety and/or water ingress, the tenants must move out. The insurer will cover the weekly rent for your property while the repairs are being completed. This cover will also respond to an entire complex being made uninhabitable due to, for example, fire or flood. The policy will specify the maximum number of weeks you are covered for rent loss on your schedule.

Fire Protection & Security

One thing to keep in mind, especially on larger complexes, is how to reduce the risk of fire and/or damage and theft by increasing the complex's fire protection and security.

Fire is one of the main causes of the destruction of entire complexes. When a fire starts in one dwelling and spreads to the others, it can quickly cause devastation. Smoke and soot damage can also severely damage buildings, even if the fire itself does not reach the other dwellings. Adding a monitored fire alarm system in the common areas of the complex can automatically call the fire brigade and reduce the response time for emergency services to arrive. This added protection can help reduce your premium by reducing the likelihood of a catastrophic fire.

The addition of CCTV, security gates, or alarm systems can also reduce the chance of theft or malicious damage occurring in the complex. It can also help identify the cause of damage in the event of a claim, which will aid your broker in processing any claims.