The question of when insurance will pay out following a burst or leaking pipe is a contentious topic. Prior to the change in sectional title legislation in 2016 traditional policy wording was more aligned but as this evolved, the understanding of the circumstances under which policies will pay, has become more difficult for the layman to understand.
The current legislation (Sectional Titles Schemes Management Act 8 of 2011), refers to “water escape, including bursting or overflowing of water tanks, apparatus or pipes”. This description implies that insurance should cover any water escape episode but in reality, this is not the case.
The traditional insurance policies had specific wording for this, i.e., sudden and unforeseen bursting, overflowing or escape of water or oil from tanks, apparatus, or pipes including any fixed water or oil-fired heating installation including damage to such tanks, apparatus, or pipes – but excluding all damage as a result of wear and tear and gradual deterioration. The previous prescribed rules were more aligned with this.
Therefore, a leak or drip or something not sudden would not be covered, specifically a leak caused by something like a pinhole or gradual deterioration over time. This would still be water escape but not covered.
The newer all-risk-type policy wordings are wider in theory in that they cover damages, subject to exclusions and conditions. It is, therefore, not specific to what is covered, but rather specific to what is not covered.
In theory, there could be a circumstance that would not be covered under a traditional material damages type policy as it was not initially stated as being covered. However, under the newer all-risk type wordings, that particular event might not be listed as an exclusion and may likely be covered.
Each insurer has its own policy wordings, which means that not every outcome of an event will be the same. Occasionally, a new policy – or enhancement to a policy – is launched with a few extra limited benefits. Therefore, it is more difficult to generalise and list exactly what would (or would not) be covered.
It is fair to say that most of the community scheme insurers we work with will cover sudden and unforeseen burst pipe events and the resulting water damage (sudden damage) as long as the damages were not caused or aggravated by wear and tear of defective design or workmanship.
Note that we are not speaking for all policy wordings but rather for the three insurers we mostly work with.
Burst pipe with resulting damage
The insurer should pay to locate and repair the pipe as well as the reinstatement, e.g., re-tile and replace any other resulting damaged areas such as ceilings damaged, carpet damaged, etc.
Deteriorated pipe, slow leak, damp over time
Not an insurance claim – no sudden water damage, or loss caused by deterioration. Gradual deterioration, wear and tear are usually excluded.
Deteriorated pipe, but sudden collapse of pipe – the sudden appearance of water, running water, pool of water, flow of water.
Insurers will usually only pay for the resulting water damage, e.g., the ceiling in a flat below that was suddenly damaged. The cost for the location of the leak, and the repair and re-tile, etc. will be for the owner’s account or if this happened on common property, for the body corporate’s account.
In many cases, it can be argued that the insurer need not even pay for the resulting damage where the cause was wear and tear related. Still, it is generally accepted that damage caused by sudden flows of water will usually be admitted but note that some insurers will not provide cover for this kind of scenario at all.
Common water damage treated as “wear and tear/gradual deterioration” (which we sometimes refer to as maintenance matters and not insurance issues) is not ordinarily covered. This includes bath or shower traps leaking or dripping, blocked pipes, shower waterproofing not working properly, roots growing into waste pipes and causing damage over time, cracked drains, sealing (silicone beads) needing replacement, rising damp, roofing needing repairs, leaking balconies, failure of waterproofing, etc.
Author: Mike Addison, Addsure
Addsure is South Africa’s leading sectional title insurance brokerage. Obtain fit and proper advice from advisors who understand sectional title. Contact our head office, Cape Town (021) 551 5069 who will put you directly in touch with one of our nationwide advisors.
Watch this related video: Understanding burst and leaking pipes: Insurance coverage explained