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We all recall the change to personal lines policies a while ago where insurers decided to determine “carpets” were now insured under a house policy rather than under contents, as had been the case previously. 

Where a person owns a unit in a residential body corporate, however, the building is insured by the body corporate (under an MD multi-unit or house policy) - but often the owner arranges to lay their own carpet, but this appears to be uninsured as carpets are excluded under most contents policies these days! Our body corporate manager states that this is not their problem and is over to the owner, as claims for carpets could affect the loss ratio and thus increase future premiums for all unit owners. 

Can anyone give me their thoughts on how best to advise owners? Without having done the exercise, are contents insurers generally prepared to delete the exclusion in such circumstances? 


Reply... Crossley Gates

The cover for carpets was moved from a contents policy to a house policy for a good reason. 

Land law says that anything affixed to a structure on the land (a house) is part of that structure, and anything sitting there by its own weight alone is a chattel and not part of the structure. 

Applying this law, any kind of fixed-down carpet that is not lying there by virtue of its own weight alone is part of the house at law. Therefore, the cover belongs in the house policy along with all the other things affixed to the house. This applies equally in a body corporate situation. The carpet is not a chattel and the unit owner's contents policy will not cover it. 

Rather the body corporate's principal insurance policy will. Yes, carpet claims will increase the loss ratio for the body corporate's insurance, but this is unavoidable when the carpets are part of the body corporate structure like other features of a unit that are affixed to it like wiring and plumbing etc. 

Dec 2019

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