Determining the insurability of a property with defects is driven by several factors however the two main contributing factors would be:

• the extent/severity of defects present
• the body corporate’s attitude to rectification, including whether there is a consensus among owners to rectify and how long the defects remain outstanding/unresolved.

While minor or moderate defects can generally be underwritten with special conditions, major defects should be carefully examined with thorough questioning and referral to the most senior underwriters.

Depending on the availability of professional reports into the issues, the nature of questions may vary, however the following questions allow the underwriter to gather enough information to make an initial assessment on acceptability. 

The general questioning could include some or all of following:

1. What defects are present?

2. What is the severity of the defect:

• Minor may include cosmetic issues
• Moderate may include building structural issues without imminent danger, but which will deteriorate without intervention.
• Major problems with structural integrity that pose risk to life/safety

3. If risk to life/safety, have the body corporate done anything proactive to reduce risk.

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