Can an owner insure their unit separately from the body corporate policy?

We often get asked a simple but important question:

“Can an owner insure their unit separately from the body corporate’s policy?”

It sounds straight forward, perhaps a few owners or even a developer would like to arrange their own insurance for specific units while the body corporate insures the rest. However, in reality, this is one of the worst ideas one could consider. Let’s unpack why.

Understanding what a “unit” really means

In sectional title, a unit is not just the section you occupy. It is defined as:

Unit = section + undivided share in the common property.

That means when you own a unit, you also own a small share of the common property, the walls, roof, foundations, and even the land beneath. So if you try to “separate” your unit for insurance purposes, you can’t really do so cleanly. It’s a bit like trying to unscramble an egg.

For example, imagine a townhouse section. The outside of your walls, the roof, and everything above your ceiling, that’s all common property. While you might want to insure your building independently, the outer half of that structure is actually owned jointly by all owners in the scheme.

If a fire damages the ceiling or roof, that’s not just your problem – it’s damage to property owned in part by everyone else.

The bigger insurance picture

Sectional title insurance isn’t only about the buildings themselves. Your body corporate policy should also include risks such as:

• Public liability cover – legal liability protection against claims made in respect of injury or damage or loss of property on common property.
• Fidelity cover – against loss of funds through fraud or dishonesty.

As an owner, whether you’re a developer or a unit holder, you automatically participate in that shared cover. If someone slips and falls on the common property and sues the body corporate, that risk and the cost of cover are shared across all owners through their undivided shares.

So, even if you could somehow separately insure your own section, you’d still be involved in claims arising from your shared interest in the common property. The two are inseparable.

What about dual insurance?

Section 14 of the Sectional Titles Schemes Management Act (STSMA) does allow for dual insurance.

This means that, notwithstanding the body corporate’s policy, an owner can take out additional cover for their section if they feel the body corporate’s policy isn’t adequate.

This doesn’t mean you can claim twice, but it does mean you can top up or extend your cover to meet specific needs that the main policy might not address. Importantly, that applies to your section, not the entire unit.

The short answer

Strictly speaking, no, A section on the other hand, can be insured, albeit still with challenges.

It’s complicated, impractical, and creates risk for all owners. The better approach is to work with your trustees and managing agent to ensure that the body corporate’s policy is comprehensive, correctly valued, and well-managed. Key is for all to work with a well-versed insurance advisor.