QUESTION
Hi Crossley,
In respect of a body corporate, are we required to ask each unit owner whether they have adverse history to declare, as they are effectively an interested party of the body corporate, rather than the individual owner of the complex?
Is an insurer able to decline a claim for undisclosed history of a unit owner?
Appreciate your time in advance.
Crossley Gates replies...
Under the Unit Titles Act 2010, a body corporate is a separate legal entity to the unit owners in the same way that a company is a separate legal entity to its shareholders.
A body corporate insurance policy insures the body corporate only as it owns the buildings and other improvements. The policy does not insure the unit owners, although they obviously benefit from the policy. Section 134 (5) of the Unit Titles Act 2010 requires the body corporate to advise the insurer of the name of every unit owner and every mortgagee.
This means that on the face of it, only the body corporate has to comply with the duty of disclosure. The body corporate is run by its committee members in the same way that a company is run by its directors.
While I suggest it would be rare, it is possible that the background of one or more of the committee members could be a material fact in the same way that the background of a director of a company seeking insurance could be. An extreme example would be if one of them had a conviction for arson.
In relation to your question about whether the body corporate has an obligation to ask every unit owner about any material facts, I am not aware of any law that expressly says this is the case. One argument against this obligation for body corporates is the fact that the insurer automatically receives the name of every unit owner by virtue of section 134 (5) referred to above. Presumably, one of the reasons for this is to allow the insurer to make its own enquiries about any of the unit owners if it wishes to.
