Check your sectional title policy

As short term policies, sectional title policies are renewed annually. Three things need to be covered properly, namely the buildings, liability and fidelity. Also, the trustees may feel the need to widen cover to include something like geyser buyback, levy guarantee cover and more comprehensive subsidence and landslip cover

After the renewal process, which should include written advice, the fresh policy schedule is issued. The sectional title policy documentation usually comprises the policy wording, policy schedule and schedule of replacement value endorsement. The policy wording is usually static, pre-printed and remains unchanged at renewal date. The policy schedule and replacement value endorsement is what needs to be checked after delivery.

The trustees should check a few things. This is usually delegated to the managing agent who would have a better understanding of the policy requirements. A few checks below:

  1. Check that the address stipulated as the “risk address” is correct.
  2. Is the sum insured correct? Was this simply escalated or is it in line with the most recent valuation undertaken?
  3. Is the rate and premium as offered in the renewal invitation or as negotiated?
  4. Is the policy type correctly selected, e.g. Sectional Title Policy or Homeowner Association policy?
  5. If the buildings house both commercial and residential sections, does the policy cater for both?
  6. Does the policy provide for “burst geysers” and “burst pipes”?
  7. Are the excesses reasonable and have they been amended?
  8. Is there at least R10 million of Property Owner’s Liability cover?
  9. If the policy has been switched, have the implications of “occurrence basis” versus “claims made basis” liability wording been considered? Click Here to read previous blog on the subject.
  10. Has Trustee Indemnity Cover been included?
  11. Has Fidelity Cover been included and if so, to what extent? Bear in mind that most policies do not meet the needs of prescribed rules, in most cases a separate FIDCURE policy is needed.
  12. Does the policy properly reflect the body corporate’s adopted Schedule of Replacement Values?
  13. Are there any onerous endorsements, conditions or exclusions?

Your sectional title insurance advisor should assist you with this and where possible, alert you to significant changes. However, the responsibility for checking the documentation ultimately lies with the trustees.

 

Author:  Mike Addison

Contact Addsure – The Leaders in Sectional Title Insurance – for fit and proper advice from advisors who understand sectional title. Contact us in Johannesburg on (011) 704-3858; in Durban on (031) 459-1795 and in Cape Town on (021) 551-5069