Sec­tional ti­tle in­sur­ance – the build­ing might be cov­ered, but not your goods

Weekend Argus (Saturday Edition) - - PROPERTY -

MANY sec­tional ti­tle unit own­ers mis­tak­enly think their body cor­po­rate’s in­sur­ance poli­cies cover mov­ables such as fur­ni­ture and cur­tains as well as the build­ings, com­mon prop­erty and all fix­tures in the sec­tions.

This is not the case, says Martin Bester, man­ag­ing di­rec­tor of In­ter­sect Sec­tional Ti­tle Ser­vices.

“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, but the onus is on in­di­vid­ual res­i­dents to in­sure their move­able items,” he says.

He says bod­ies cor­po­rate in­sur­ance poli­cies cover the build­ings, all fix­tures and fit­tings and li­a­bil­ity and in­dem- nity in­sur­ance against per­ils spec­i­fied in the Sec­tional Ti­tles Act, as well as other per­ils the mem­bers may de­cide are re­quired.

“Per­ils such as light­ning, storm, flood, fire, earth­quake, burst­ing gey­sers or hot wa­ter ap­pa­ra­tus and re­sul­tant loss of rent are cov­ered.

“Ex­cess pay­ments are pre­de­ter­mined and ne­go­ti­ated with the body cor­po­rate in­sur­ance bro­kers or in­sur­ers.

Dif­fer­ent ex­cesses ap­ply to dif­fer­ent per­ils and the more a par­tic­u­lar peril is claimed for the higher the pre­mium and ex­cess are likely to be at re­newal. Ex­cesses for claims re­lat­ing to com­mon prop­erty are payable by bod­ies cor­po­rate. How­ever ex­cesses payable in terms of sec­tions are pay- able by the owner of the sec­tion suf­fer­ing the loss.”

Pre­scribed Man­age­ment Rule 29(4) says own­ers of sec­tions are re­spon­si­ble for any ex­cess pay­ments in re­spect of their sec­tions, payable in terms of a con­tract of in­sur­ance en­tered into by the body cor­po­rate: pro­vided own­ers may, by spe­cial res­o­lu­tion, de­ter­mine that the body cor­po­rate is res- pon­si­ble for ex­cess pay­ments in re­spect of spec­i­fied dam­age.

Bester says some bod­ies cor­po­rate have amended their rules to deal with the ap­pli­ca­tion of ex­cesses. But be­cause so many cases are not cut and dried, ap­pli­ca­tion of the rule that each owner is li­able for an ex­cess if he suf­fers a loss seems to re­move am­bi­gu­ity and ar­gu­ments from the equa­tion.

Bester says own­ers can in­sure their units for more than the sum bod­ies cor­po­rate pro­vide.

“The mem­bers ap­prove the in­sur­ance re­place­ment val­ues at each AGM. How­ever the body cor­po­rate only in­sures at an agreed rate, so if the owner feels the sum in­sured for his sec­tion is too low, usu­ally as a re­sult of in­ter­nal im­prove- ments, he may in­crease the sum in­sured via the body cor­po­rate’s pol­icy. The owner will be li­able for the dif­fer­ence in the pre­mium as a re­sult.

“Al­though the onus is on the trus­tees to en­sure that build­ings are in­sured to their full re­place­ment value, the value needs to be de­ter­mined, and for this, pro­fes­sional val­u­a­tions are rec­om­mended,” he added.

Newspapers in English

Newspapers from South Africa

© PressReader. All rights reserved.