Sectional titles and insurance - are you covered?
If you have premises within a sectional title development are you sure that you are sufficiently covered by your insurance in case of damage or loss?
Many people are under the mistaken impression that the body corporates insurance policy covers movables such as furniture and curtains as well as the buildings, common property, and all fixtures within the sections. However this is not the case.
According to Martin Bester, the Managing Director of Intersect Sectional Title Services, who sits on the board of the Residential and Sectional Title Committee of SAPOA and is a committee member of the Sectional Title Regulations Board, many clients are not only under the mistaken impression that they are covered by the body corporate insurance but also that they are covered if they take out personal insurance, or home owners insurance, even though they are in a sectional title development.
Prescribed Management Rule 29(1)(a) places a duty on the trustees to ensure that the buildings and all improvements to the common property are insured from the very beginning, and thereafter renewed every year. The onus for insurance on moveable items falls on the individual residents.
At Intersect we advise our clients to have the buildings and improvements professionally valued every three to four years, so as to ensure that the replacement values applied are reasonable and accurate.
Bester says that excesses are also often a topic of debate in sectional title. Prescribed Management Rule 29(4) deals with this and basically prescribes that the excess is payable by the owner(s) of the section(s) that suffers the loss or damage. Should the loss or damage occur on the common property then the body corporate is liable.
A substantial amount of insurance claims in sectional title developments are water damage claims. Damage as a result of water ingress, burst water pipes, burst geysers and storm or rain damage are typical sources. Routine or preventative maintenance can reduce the risk of these incidents and thereby reduce or contain the claims at a scheme.
Maintenance such as inspecting, cleaning and fastening gutters, downpipes and drains as well as annual checks on the roofs and flashing and water heaters are all good ideas and schemes with swimming pools should be conscious of their obligations towards health and safety and ensure that suitable liability cover is in place.
Keeping a handle on the claims and claims history is a good idea as the insurance premium could be affected by this, concludes Bester.
Article by: www.intersect.co.za