Trustees who wish to review their insurance often engage with many brokers for the best quote for their buildings. This is not the correct way to deal with sectional title insurance.
Sectional title insurance is more about insuring the body corporate, a collective of property owners, rather than insuring just the buildings. Trustees are required to insure the buildings, protect owners and trustees in respect of liability pertaining to the common property and also insure against dishonesty on the part of trustees and managing agents.
The very first step is to choose the right broker or advisor, a specialist in the field of sectional title insurance. The insurance broker or advisor, once appointed, can then properly assess the risks and recommend the most appropriate cover to the trustees.
How does one choose or find such a broker?
Do a bit of homework. NAMA (National Association of Managing Agents), key managing agents, sectional title experts and insurers themselves can refer a good broker or advisor.
Ask yourself some important questions:
- Is the body corporates insurance advisor a sectional title specialist or a general broker’?
- Have the trustees taken care with their choice of insurance advisor?
- Is the broker’s employees properly trained in sectional title matters?
- Does the broker understand basic sectional title legislation and rules?
- Can your broker assist with preparation of the schedule of replacement values?
- Does the body corporate’s broker recommend a sectional title specific policy?
- Can the broker provide a policy covering fidelity adequately in terms of rule 29.2(b)?
- On annual policy renewal, do the trustees receive a copy of the advisors or broker’s record of advice (preferably a letter of advice) with comparative quotes?
- Has the body corporate’s insurance advisor visited the premises and provided some guidance in respect of the risks?
- Does the broker offer trustees and interested owners coaching or workshops in trusteeship and insurance?
The Sectional Title Insurance Guide provides far more insight into the important role of the trustee and the importance of working with sectional title insurance specialists (see inside back page).
Once a broker or advisor has been chosen, provide the broker with as much information as possible. The broker should be advised of any additional risks, e.g. commercial sections, woodworking, storage of flammable materials, etc. If the body corporate has its own insurance rules which have been amended, e.g. specific fidelity rule, a copy the rule should be provided.
Remember that many brokers do not understand sectional title legislation and the associated rules. Fidelity cover, for example, is often overlooked. Bodies corporate are better served by the trustees appointing the best specialists in their fields, especially with regard to the important responsibility of insurance.
Author: Mike Addison, Addsure
Contact Addsure – The Leaders in Sectional Title Insurance – to get fit and proper advice from advisors who understand Sectional Title. Contact us in Johannesburg (011) 704-3858; Durban (031) 459-1795; Cape Town (021) 551-5069