In this blog we take a look at dual insurance cover. Dual insurance or double insurance is where the same risk is insured by two overlapping but independent insurance policies.
The new Sectional Title legislation (soon to be effective) provides for double insurance:
Sectional Title Insurance by owners (Section 14 of the Sectional Title Schemes Management Act):
- (1) Notwithstanding the existence of a valid insurance policy effected by the body corporate pursuant to the provisions of section 3(1)(h), an owner may obtain an insurance policy in respect of any damage to his or her section arising from risks not covered by the policy effected by the body corporate. (2) This section does not limit the rights of an owner to insure against risks other than damage to his or her section.
In a previous article, we discussed dual insurance and current sectional title legislation.
In this article, we focus on a trend we are seeing whereby owners are often insuring their already insured buildings unintentionally. Not everyone understands insurance and with so many financial products, it can all get very confusing.
With so much insurance business being done online or by way of direct call centers, proper advice is not necessarily dispensed as the operator is not necessarily familiar with sectional title legislation.
Most domestic policies offer the various standard sections including a buildings section or homeowners section. What happens often is that policies are sold with a homeowners section included which means that the policy holder will now pay for insuring their sectional title homes again as the sectional title policy already covers this risk.
The new Sectional Titles Schemes Management Act provides for an owner to effectively top up or cover gaps in their cover and does not suggest claiming on their own policy for cover effected by the body corporate.
To ensure fairness to clients, we believe that the body corporate policies should respond in full and the duplicated policy should only pay out where the additional benefits are covered in the domestic policy.
If this occurs at point of sale, the needs of the owner were not properly assessed. Although it is common practice in South Africa to share the loss at claim stage and then claim back proportionate contributions of premium, this cannot logically occur as the sectional title premium is covering the entire scheme. Where duplicated policies or policy sections were taken out in error, we feel that premiums should be refunded in full. Owners in sectional title schemes should double check their policies and where this duplicate insurance has occurred, take steps to claim back premiums double paid from their personal insurers.
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