People buying into high-density housing are being told by the insurance industry to do due diligence before signing a contract.
The Insurance Council said such properties have unique insurance requirements that if overlooked could create headaches in the future.
"If a unit is attached to other units and doesn't have a body corporate structure in place, many insurers may not provide insurance because of complexities that can arise at claim time if not all units are insured or if they have different levels of cover from different insurers," Council chief executive Tim Grafton said.
"Owning your own home is increasingly difficult for New Zealanders and we want to ensure buyers aren't tripped up by steps to make properties appear more affordable when they could actually cause more expense in the future."
A body corporate is a single point of insurance that covers the entire building as well as each unit. It also includes shared spaces and common areas, such as hallways and foyers.
Grafton said buyers should be cautious when developers and agents try to sell properties that do not have a body corporate as a way to save time and money.
"It sounds very attractive but the critical thing is with these properties that share the same roofs, the same walls as another owned property.
"There might be a damage to a wall that you're both sharing, how does that get fixed up? How does one policy interact with another?"
Grafton said although these arrangements are seen as adding extra costs and administration for owners, they ensure claims are settled simply and efficiently.
His advice is that people considering buying in a multi-unit building ought to consult their insurer first.