The signing of certain insurance documentation correctly is critical. This is vital for ensuring legal compliance and protecting the interests of all parties involved. There are three key areas where proper signing of documents is particularly important.
1. Appointing your broker
When appointing an insurance broker, it’s essential to follow the correct procedures to ensure the appointment is legally binding. According to prescribed management rule 10, any signed document pertaining to the sectional title must have two signatures: Either the signature of two trustees, or one from a trustee and one from the managing agent.
This ensures that the document is signed by the right individuals ensures legal compliance and removes or at least reduces the risk of the appointment being reversed.
It increases accountability and reduces the risk of unauthorised decisions, or more simply put, reduces the risk of appointments in breach of Section 58 the Property Practitioners’ Act which deals with the relationship of property practitioners (managing agents in this instance) and suppliers (insurance brokers). Likewise, reduces the risk of trustees making unilateral decisions for nefarious reasons.
As a best practice, avoid leaving this task solely to your managing agent. Make sure that at least two trustees or one trustee and the managing agent sign the document.
2. Signing off on insurance claims
When submitting an insurance claim, the process must be handled with the same level of diligence. Whether you’re dealing with a traditional claim form or authorising a claim via a link, the signatures of two trustees or one trustee and the managing agent are required. This is crucial from a legal standpoint because:
Legal validity: A claim form is a legal document that establishes your contractual claim under the insurance policy.
Avoiding disputes: Properly signed claims help prevent disputes that could arise if the claim form is challenged in court.
In the context of the Sectional Titles Schemes Management Act, the body corporate is the insured party. Hence, ensuring that claim forms are signed correctly is vital for the legitimacy of the claim.
3. Agreement of loss
After a claim is processed and the insurance company agrees to a disbursement, an agreement of loss must be signed. This document is essential when the insurance company opts to pay out the claim in cash. The procedure here includes:
Multiple signatures: Similar to the other documents, the agreement of loss should be signed by two trustees or one trustee and the managing agent.
Owner’s section: If the claim pertains to an owner’s section, the owner should also sign the agreement, but this should not be done in isolation. The signatures of the trustees or managing agent are also necessary to attest the document.
To ensure transparency and proper handling of funds, initially, the payout should be directed to the body corporate’s bank account. Subsequent distributions can be managed from there, but starting with the body corporate’s account ensures proper oversight.
Conclusion
Following these procedures for document signing in sectional title insurance is not just about ticking boxes. It’s about ensuring that the processes are legally sound, transparent, and accountable. By adhering to prescribed management rule 10 and involving the right signatories, you safeguard the interests of the body corporate and its members.
Author: Mike Addison
Addsure is a leading sectional title insurance broker. Get fit and proper advice from advisors who understand sectional title.