QUESTION:
An insured builds a self-contained home. The building is intended to be lived in by the insured (owner-occupied). It is 100% residential use. It is a freestanding home that is not attached to any other building. It has its own access to mains water and everyday household amenities.
The insured owns (under the same name) the legal title upon which the home is constructed. On the same legal title the insured also owns commercial buildings which are leased to tenants. The property is built in a surrounding area that is predominantly commercial in nature.
My question is, does the insured's home still meet the definition of a dwelling (under NHI) and can it therefore be insured under
a residential home policy, or does the fact the title is shared with other buildings that are commercial in nature prevent the property from being insured under a home policy?
The prospective residential insurer is saying that it needs to be insured commercially as the property is in a "commercial area
and is surrounded by commercial properties." However, in my view this isn't relevant as most residential insurers will allow you to arrange a residential home policy if the property is 100% residential in use and meets the definition of a dwelling under NHI.
EXPERT ANSWER: Lynne Robinson - Natural Hazards Commission
For NHCover to apply, there must be a valid policy that includes fire insurance over the residential building (this means a 'fire insurance contract' under the NHI Act) at the time of loss. The timing to determine whether the building or part of the building meets the definition of a ‘residential building’ is every time a private insurer makes or renews a policy that includes fire insurance.
To come within the definition of a residential building in the NHI Act, a building (or part of a building, or other structure) must contain one or more dwellings.
‘Dwelling’ is defined in section 6 of the NHI Act. Section 6(1) states that to be a dwelling (the ‘dwelling test’), the premises must be:
• self-contained with the facilities necessary for day-to-day living on an indefinite basis (including somewhere to cook, sleep, live, wash and use a toilet), and
• used as the home or holiday home of at least one person or it is capable of being, and is intended by its owner to be, the home or holiday home of at least one person.
Based on the information you have provided, the building meets the dwelling criteria under section 6 of the NHI Act and should have NHCover (subject to all other requirements of the NHI Act being met).
For clarity, a premises that is a ‘residential building’ as defined by the NHI Act has NHCover and that cover is not affected by the fact that there is any other building or structure (e.g. non-residential or uninsured building) owned by the insured person on the same
record of title.
