BODY CORPORATE/SECTIONAL TITLE INSURANCE
In terms of the Sectional Titles Act (Section 37 of the act sets our functions of the Body Corporate). Some of these relate to Insurance aspects such as : All buildings, fixtures and fittings, outbuildings, walls, gates posts and fences and common property must be insured.
In terms of the Act, there is a provision for Management and Rules which provides for the control, management and administration or the Body Corporate. Usually a Chairman and Trustees are appointed for this function.
It is their duty to ensure that the buildings and common property areas are properly insured for Replacement value under an appropriate Body Corporate policy wording which is specific ally designed for Sectional title owned properties whether it is occupied as a residential property with separate units or a block of flats or a Business premises occupied as offices or factory warehouses.
The insured perils include risks such as:
• Fire, lightning, explosion, storm, flood or earthquake, malicious damage.
• Aircraft and other aerial devices or articles dropped there from
• Bursting or overflowing of water tanks, apparatus or pipes
• Impact with any of the said buildings or improvements by any road
vehicle horses
• or cattle
• Housebreaking or any attempt thereat
• Loss of occupation or loss of rent in respect of the above risks
• Such other perils or dangers as the trustees or any holder of the first
mortgage bonds over not less than 25% in number of the units in the
scheme, may deem appropriate
• Property Owners Liability
• SASRIA cover (political riot, strike and civil commotion)
• Burst geysers (subject to terms and conditions)
At each AGM meeting, the Trustees and the owners by invitation are presented with a Schedule setting out each Unit number with a corresponding Sum Insured determined by Participation Quota (PQ) equal to the “floor space” in square meterage.
(The Schedule is prepared at the outset in conjunction with a Quantity Surveyor based on floor space per square meter of each unit).
There are appropriate Policy wordings which conventional Insurers can issue under their Multi Mark III wording. However there are a few specialist Insurers who can provide wider covers to include such risks as:
• Accidental damage to: fixed Glass, public supply connections between the
property insured and the public supply or mains.
• A provision for Landscaping in the event of storm damage
• Office contents insurance for the Trustees.
• Loss of money e.g. theft from an office safe, hold-up or money carried in
transit to or from the bank.
• Fraud or dishonesty of employees/trustees. E.g. theft of money or other
property.
• All Risks cover for Gate Motors, signage, air conditioners, security
cameras, lawnmowers & other garden equipment, satellite dishes etc.
• Machinery Breakdown – sudden unforeseen physical damage to
machinery such as air conditioning plant, boilers, garage doors, lifts,
automatic gates, transformers and boreholes.
If an individual is purchasing a “Unit” which forms part of a Body Corporate, the buildings will automatically be covered under the Sectional Title Group Policy and the Insurance replacement value will be based on the Participation Quota as stated in the Schedule.
The cost of Insurance is included in the Levy.
If a purchaser/owner undertakes renovations and improvements to the unit resulting in the value being higher than the PQ of the Insurance schedule, they will be required to pay the additional premium for the difference in value.
If the unit in purchased via a Bank or Finance company the bank or finance company will require a copy of the Insurance Schedule or Certificate of Insurance noting the bank’s interest in the property. Your transferring Attorneys will usually obtain this from the Insurers on behalf of the Bank.
As it is the duty of the Trustees or Chairman to ensure that the Buildings are correctly and adequately insured, they may approach Yourinsurance Brokers for a Quotation and proposal.
We would require such information as a list of the PQ and Claims experience over at least a 3 year period:
• Any other relevant underwriting information relating to the risk would be
useful.
• For example: Type of construction? Flats, separate free standing cluster units, townhouses? What is the complex? What material is the roof/walls made of? Area?
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