Over the last several years there's been a significant growth in apartment blocks.

Ten years ago it was a relatively rare feature of our property market. So much so that insurers appear not to have given them a lot of consideration.

If you now look at most of our major cities, the site of multi storey apartment blocks is very common. These take the form of single level strata units or multi-storied apartment buildings.

The insurance industry has failed to adapt to this change and therefore has policies for buildings and contents that are not safeguarding owners and/or occupiers for the financial risk they face.

Specifically it's the amount of liability insurance where the issue arises. Currently policies provides Owners liability of between $1m and $2m (see our data here) and Occupiers Liability under contents insurance is the same (contents summary data here).

By comparison, Australian insurers provide up to 20 times more liability protection than here. Over there policies generally provide liability insurance of $20m and occupier's liability under contents insurance is usually for a similar amount.

While the chance of a claim is rare, is still a real possibility. If through a single apartment occupiers negligence a fire starts, or a water overflows, in a multi apartment block, damage to other apartments in the complex is very likely. Claims for the damage to the building and contents would be added to by loss of rent, temporary accommodation and so on. You would likely find $1m or even $2m woefully insufficient.

Anybody who is living in this type of property needs to update the amount of liability insurance now.

Unfortunately the only way to achieve this is to approach your insurance company and ask them to increase your cover. The amount should be sufficient to not only protect you for damage to the building but for all related claims as well.

In most cases your insurer will probably need to do this by buying insurance protection for this as they would be unlikely to take a risk of this size without co-insuring it. As a one off this is usually done through a reinsurance arrangement known as facilitative insurance. Expect to be charged for this type of arrangement.

By far the best approach would be for companies to permanently review their capacity for this and provide automatically sufficient protection ($20m) as part of their standard policy offering.

This should have very little impact on premiums charged, as the facility spread over the market would have a negligible impact on pricing. This would seem to be the case as the Australian products provide substanially more liability cover and are still priced similar to New Zealand.