How is my garage insured?

A broker who understands sectional title will ask the right questions about your garages, ensuring they are insured correctly, reflected accurately on the schedule of replacement values, and that everyone understands who is responsible for what at the claims stage. Let’s unpack this topic.

Garage as a section

This is the simplest and most common form, these days deemed a utility section. The garage appears clearly on the sectional plan with its own participation quota (PQ).

Garages are usually valued at a much lower rate per square metre due to the lower grade of finishes, often no ceiling, un-plastered walls, and a simple cement floor. The valuer will note these figures, and the insurance broker should reflect them accurately on the SRV.

Garage as part of a section

Sometimes, the garage forms part of the main section. The valuer may separate the values or average them. Here, owners and brokers must be careful not to understate the overall building rate. If the garage valuation (at a lower rate per sqm) is averaged in, it could reduce the overall replacement rate, leading to underinsurance.

3. Common property garage

In many schemes, garages, though used by owners, are common property. They may be rented to owners or simply used on a de facto exclusive-use basis, i.e., without a formally created EUA.

These should appear as a separate line item under “Common Property Garages” on the SRV.

Common property garage – exclusive use area (EUA)

Exclusive-use garages can be created in one of two ways:

By notarial deed, in which case the EUA is formally reflected on the sectional plan and is easily identifiable.

By rule allocation, where the EUA is created in terms of the management or conduct rules.

In both instances, the garages remain common property. However, more care is needed when estimating premiums and contributions for these areas.

When brokers prepare the SRV, each type of garage will appear differently. Owned-section garages are listed alongside residential sections; common property garages appear as separate line items.

For EUA garages, brokers often create debit advice vouchers for each EUA so that managing agents can recover contributions from the benefiting owner.

At the claims stage, who pays the excess?

This is often where disputes arise.

Responsibility for the excess depends on the scheme’s rules and the nature of ownership.

For example:

Damage to the roof of a sectional garage would typically be for the body corporate’s account (as the roof lies outside the median line).

Damage to an EUA garage roof, however, may be for the owner’s account, depending on how the rules allocate responsibility.

It can get tricky, which is why clarity at policy setup stage is so important.

Use of the garage

If the sectional plan designates a space as a garage, the insurer assesses the risk and premium based on that use. Changing the use without notifying the insurer (for example, converting a garage into a living area) can affect cover and premiums. Such conversions often increase fire risks, particularly when fire doors are removed or electrical layouts are altered.

Storage in the garage

Garages are meant primarily for parking vehicles. Storing a few household items, such as camping gear, tools, or sports equipment, is normal and acceptable.

However, when a garage becomes a full storage unit, the fire risk rises significantly. If not disclosed, a claim following a fire could be rejected or limited.

What should be avoided?

Garages in residential schemes should not be used for business purposes or for storing dangerous goods.

Avoid keeping:

• Flammable materials (e.g. petrol, gas, paint, thinners, turpentine)
• Explosives (e.g. ammunition, fireworks)
• Business stock (including items containing lithium batteries)
• Chemicals, poisons, or large quantities of paper/cardboard

In summary

It takes an experienced sectional title insurance broker to structure both the SRV and the policy correctly. A knowledgeable broker will also guide trustees on how to allocate values and responsibilities, helping to prevent disputes over excess payments and ensuring proper risk management at claims stage.