Buildings insurance: What is covered?

[Updated: 23 April 2025]

Sectional title schemes in South Africa are legally required to have various types of insurance in place to protect the scheme, its assets, and its members. These requirements are set out in the Community Schemes Ombud Services (CSOS) Act, the Sectional Titles Schemes Management (STSM) Act, and related regulations and rules.  Building insurance is often perceived to be everything a scheme needs to cover. This is certainly not the case. If one analyses the aforementioned and simplifies for ease of understanding, we at Addsure divide the required coverage areas into three distinct areas. We call it the Sectional Title 1-2-3 approach to insurance. Building Insurance, Fidelity and Liability.

1. Building insurance

The body corporate must insure all buildings in the scheme to their replacement value against fire and other prescribed risks. This includes:

• Lightning, explosion, and smoke
• Storms, wind, hail, and floods
• Earthquakes and subsidence
• Water damage (e.g. from burst pipes), burst pipes
• Riots, strikes, and malicious damage therefrom
• Impact by vehicles and aircraft
• Housebreaking and attempted theft damage

A replacement valuation should be undertaken at least every three years and be presented at the AGM. It must also specify a replacement value per unit and allow members to request increases for their units’ value.

 2. Fidelity insurance (fraud/theft cover)

Every community scheme must insure against losing money due to fraud or dishonesty by any insurable person (trustees, scheme executives, managing agents and their employees, contractors who handle scheme funds).

The minimum cover required is:

The value of the scheme’s reserves and investments (as at the end of the last financial year) plus

25% of the current year’s operational budget

3. Public liability insurance

The body corporate must also have public liability insurance to protect the owners against liability claims in respect of injury, illness, death and damage or loss of property occurring on or linked to the common property.

At the time of writing this update, the minimum cover is R10 million per claim, unless a higher amount is prescribed or determined at a general meeting.

Schemes may also decide, by special resolution, to insure against additional risks or interests

Owners also have the right, notwithstanding the scheme’s cover, to take out their cover in respect of their section.

Focus on the building’s insurance cover

In point one above (buildings insurance), we set out the legislative requirements.  To simplify into layman’s terms, generally, the following “what is typically covered” and “what is NOT typically covered” can be considered the norm in terms of coverage offered by most of the insurers we work with:

What is typically covered:

•  Fire, lightning, explosion
•  Wind, hail, storm, snow
•  Burst pipe – not as a result of wear and tear
•  Burst geyser
•  Impact, such as a vehicle colliding with gate/wall
•  Accidental damage – e.g. spillage of paint, dropping of heavy item
•  Flood, sudden water damage
•  Damage caused by a break-in/burglary to property

 What is NOT typically covered:

Here are some examples where cover is usually excluded:

•  Water penetration/ingress over time caused by failed waterproofing
•  The failed waterproofing itself
•  Water damage occurring “whenever it rains” due to a leaking balcony from flat above
•  Damage to ceilings, over time, due to the bath trap or the shower above leaking
•  Damage to pipes, leak detection and repairs where pipes are decayed, rusty, or leaking, having pinholes (corrosion)
•  Leaking pipes not as a result of bursting, e.g. waste or drain pipes (not under pressure)
•  Cracks appearing in tiles or walls unrelated to any specific claimable event
•  Damp
•  Damage of unknown cause
•  Seeping of water, dampness, and mould as a result of a leaking pipe or a pipe with “pinholes”
•  Rain damage due to the windowsill not being waterproofed properly
•  Damage resulting from defective design or defective workmanship
•  Damage to vehicles or other items not belonging to the body corporate
•  Damage to the owner’s or tenant’s contents
•  Damage caused by tree roots growing into pipes or walls over time
•  Leaning walls/walls acting as retaining walls

Arranging fit and proper insurance is not just a legal requirement, it is a crucial part of good scheme management. Every sectional title scheme must ensure it is:

• Insuring the buildings at full replacement value and keeping values up to date
• Protecting its funds from fraud and dishonesty
• Covered against public liability risks as set out in the rules.

Owners should be guided as to what is and what is not covered. We suggest making resources such as below available to owners via newsletter links or share via email. When owners are better informed at claims stage, expectations can be more realistic, and disputes and unpleasantness avoided!