10 questions Sectional Title owners should ask about insurance

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We are seeing many new complexes and Sectional Title schemes being built and in light of this we have created ten questions Sectional Title owners should ask about the insurance.

Who are the insurance brokers and which company is the complex insured through?

There are quite a few companies and brokers who specialise in Sectional Title insurance. It is important to deal with a broker and insurance company that understands the Sectional Titles Act and can give you the correct advice. The cheapest premium is not always the best option. Do they pay claims?

What is the sum insured on the complex?

The complex must be insured at full replacement cost. It is important to have the complex valued by a professional valuer to ensure that the complex is adequately insured.

When last was the complex valued?

The insurance valuation must be updated regularly to ensure the sum insured is correct. New draft regulations will also require a body corporate to have the building valued every three years.

What is covered?

Insurance is "covered" or dealt with in more detail, by Management Rule 29. It is important to familiarise yourself with the requirements of the Act and ensure your complex is compliant. In terms of the draft STSMA regulations, fidelity and public liability insurance must be on the agenda at each AGM. This type of insurance is to cover a body corporate's liability due to injury, death, damage to, or loss of, property sustained in connection with the common property. The draft regulations state that the minimum amount of liability cover must be R10 million.

What are the applicable excesses?

You need to know what excess you will be liable for in the event of a claim. Some policies have cheaper premiums but the excesses are higher. Excesses are also higher if there are numerous claims on a policy. Familiarise yourself with the claims history and applicable excesses.

Are the geysers covered?

Most of the policies have an option to insure geysers without any excess in the event of claim. Check if your geyser is covered by the policy and what the excess is in the event of a claim.

What do I do in the event of a claim?

Every policy will have a procedure to follow in the event of a claim, familiarize yourself with them. For example, must you contact a call centre or the brokers to lodge a claim? What happens in the event of a claim after hours?

What happens if the complex is underinsured?

Policies are subject to Average. This means you must insure for the full replacement value inclusive of VAT. If you fail to do this you will only be compensated a similar proportion of your loss. For example, if you insure for half the full value, you will only be paid half the value of your claim.

Can I increase the sum insured on my unit?

If you have renovated your unit and feel the sum insured by the Body Corporate is too low, you can increase the sum insured on your individual unit. You will then be liable for the increase in the premium.

Are there any endorsements on the policy?

Some policies have endorsements on them. For example, the sewerage pipes must be high pressure cleaned every month. It is important to ensure the endorsements are met to prevent claims being repudiated.