What is Jointly Owned Building Insurance and Why is it so important?

Jointly Owned Building Insurance refers to the insurance protection of the entire building and the common property of all co-owners participating in an apartment building or residential complex.

In a jointly owned building, damage to one part of the structure does not affect only one owner. It may impact the structural integrity, functionality, safety and ultimately the value of all individual units.

Jointly Owned Building Insurance:

• protects the common property of all co-owners,
• ensures financial capacity for reinstatement following a major loss,
• prevents disputes and disproportionate financial burdens among owners, and
• Safeguards the long-term value of the building.

For this reason, such insurance constitutes a fundamental pillar of proper property management in any multi-unit development.

What Cypriot Legislation Provides for Jointly Owned Building Insurance?

The compulsory insurance of jointly owned buildings is a significant matter affecting apartment buildings and residential complexes in Cyprus.

The objective of the legislation is:

• to ensure that the common property is protected against serious and unforeseen perils, and
• to secure the ability to reinstate the building in the event of major damage.

The extension of Third-Party Liability cover for accidents occurring in common areas is not mandatory under the law. It is an optional insurance coverage.

1. Legislative Framework

In Cyprus, the insurance of Jointly Owned Buildings is primarily governed by:

• Law 6(I)/1993 regulating the management of jointly owned buildings, and
• The Immovable Property Law of 2019.

According to the legislation:

• The Management Committee of each jointly owned building is obliged to maintain insurance for the building against the perils of: Fire, Lightning, Earthquake,
• the insurance must be arranged on a reinstatement (replacement) value basis, and
• it must be effected with a duly licensed insurance undertaking.

Importantly, the statutory obligation refers to the insurance of the entire jointly owned property, not merely the shared areas. The law requires insurance of the building as a whole.

What is considered a Jointly Owned Building?

Key Legal Definitions, Under the legislation:

A jointly owned building is a building consisting of at least five units, even if all units belong to a single owner.

A unit means a floor, part of a floor, room, office, apartment, shop or any other space that can be used as a complete, separate and independent property and is separately registered in the Land Registry.

The extent of a unit includes the covered area and its covered and uncovered verandas and balconies.

Common property means every part of the building not registered as a unit and includes indicatively:

• foundations and structural framework,
• main and common walls,
• roof,
• electrical and plumbing installations,
• plant rooms,
• staircases,
• lifts,
• corridors,
• yards, entrances, fences, terraces and gardens.

Limited common property refers to a part of the building allocated for the exclusive use of one or more (but not all) units. Typical examples include a designated parking space or storage room assigned to a specific unit.

The Management Committee

The Management Committee is responsible for the overall administration of the jointly owned building.

Under the law, it is responsible for:

• arranging the compulsory insurance,
• ensuring that the policy remains in force at all times, and
• ensuring that the Sum Insured reflects the true reinstatement value of the building.

Proper insurance protection is a key risk-management tool for the Management Committee in safeguarding the interests of all co-owners.

The Committee is also obliged:

• to insure and keep insured the building against fire, lightning and earthquake, and
• to pay the relevant insurance premiums.

Insurance against any other perils becomes compulsory only if approved by a majority exceeding 50% of the ownership share.

What is insured under a modern Jointly Owned Building Policy?

A modern Jointly Owned Building Insurance policy may provide cover for:

• the common property,
• common installations,
• insured units,
• and common equipment and contents located within enclosed common areas.

The underwriting philosophy is the protection of the building as a single functional entity.

What a Comprehensive Policy covers in practice?

In practice, a comprehensive policy may indemnify against material damage arising from:

• fire and smoke,
• electrical events leading to fire,
• lightning,
• fire-fighting expenses and damage caused by extinguishing operations,
• earthquake,
• explosion of domestic boilers or gas installations,
• storm and other severe weather conditions,
• flood,
• impact by vehicles or falling objects,
• malicious damage,
• escape of water, bursting or overflow of pipes and tanks,
• falling trees or poles,
• wildfire originating from forest or bush areas,
• burglary and robbery affecting insured areas.

Such cover addresses the principal perils that may seriously disrupt the operation and financial stability of the building.

Cover for Common Parts and Modern Installations

Special emphasis is placed on:

• structural elements,
• common installations,
• lifts,
• plant rooms,
• entrances, yards and fencing,
• as well as modern external installations such as photovoltaic systems, shading systems, external air-conditioning units and security systems.

These components now represent a significant portion of the building’s capital value and exposure.

Optional Third-Party Liability Cover

Third-Party Liability insurance for accidents occurring in common areas:

• is not compulsory under the law,
• but is considered one of the most critical protections for any Management Committee.

Common areas (entrances, staircases, corridors, lifts, courtyards, parking areas, etc.) are used daily by residents, visitors, contractors and other third parties.

In the event of an accident — for example, a slip on a wet floor, injury due to poor maintenance or damage arising from a common installation — liability may attach to the jointly owned property and, in practice, to the Management Committee.

Third-Party Liability:

• protects the Committee and co-owners against compensation claims by third parties,
• covers claims for bodily injury, property damage and related legal costs,
• prevents a serious accident from becoming a substantial financial burden on the co-owners, and
• operates as a critical safeguard against legal exposure arising from everyday incidents.

Although not legally mandatory, Third-Party Liability cover is, in practice, an essential risk-management instrument for any jointly owned building.

The micomplex Insurance program of Minerva Insurance Public Company Ltd

Minerva Insurance Public Company Ltd, with its longstanding presence in the Cypriot insurance market, continuously monitors the evolving needs of modern apartment buildings and residential complexes.

Responding to:

• the increasing complexity of jointly owned developments,
• modern technical installations, and
• the heightened responsibilities of Management Committees,

Minerva Insurance has designed specialized insurance programs tailored to the specific requirements of jointly owned buildings in Cyprus, offering flexibility, meaningful coverage and policy customization according to each building’s risk profile.

Under the micomplex Policy, there are three specialized programs available:

• Essential
• Extended
• Privilege

The micomplex programs provide the option to insure:

• the Jointly Owned Property,
• Common Contents,
• Individually Owned Units, including their contents,
• as well as to extend the policy to include Third-Party Liability cover.

The nature and extent of cover are always specified in the Policy Schedule, depending on the selected program and the insured’s selections.

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