Insurance for tools and equipment owned by community schemes

Does your community scheme own tools and equipment used to maintain the scheme’s property? This could be anything from a screwdriver to lawnmowers or similar machinery. The value of these tools and equipment needed to maintain the property can quickly add up.

Increasingly, schemes are experiencing burglaries where tools and equipment are stolen. Criminals tend to seek out more expensive equipment such as power tools, brush cutters, lawnmowers and even security equipment such as cameras. Sometimes smaller hand tools are being targeted too.

Replacing these items can be expensive and prices are often considerably higher than when the equipment was first purchased.

In challenging economic times, having to replace lost or stolen equipment can place an increased and otherwise unforeseen burden on the scheme’s budget. While insurance does offer solutions for the replacement of lost items, the insurer will not simply pay out what is claimed without suitable supporting claims documentation.

Most insurance policies will provide some cover for tools and equipment stolen from a secure location; some even offer limited cover for equipment lost while in the open. However, these cover extensions are limited and where several items are lost in a single incident, the cover provided will often fall short of the actual financial loss.

In addition, remember that insurance cover is for the replacement value of lost equipment. If a particular branded item is lost and insurance is in place, then the expectation is that the insurer will replace that item with the same or similar (like-for-like) item subject to the cover limit in place.

Where cover simply extends to cover general tools and equipment, insurers will likely limit the value per single item. As an example, an insured value of R5 000 may have a limit per item of R750. Where single items are of significant value, they should be specifically insured and not included as general equipment.

Unfortunately, when tools and equipment are lost or stolen, the temptation to inflate losses or claim for higher quality tools, whether intentionally or out of ignorance of actual values, is very real and something the insurers are faced with regularly. In an effort to curb such practices, insurers are more frequently requesting proof of purchase or ownership of more expensive items before settling claims. In reality, and for various reasons, schemes seldom have such documentation and so the insurer is faced with a decision to either reject a claim or limit the settlement offer.

In light of this, the trustees and managing agents are encouraged to insure tools and equipment that may have an increased risk of loss by theft and burglary. In addition, they should also ensure that suitable records are maintained of the acquisition and ownership of such property. In doing so, if tools and equipment are lost, items can be clearly identified and claims can be processed and finalised with far greater ease.

Author: Bruce Gibson

Contact Addsure – The Leaders in Sectional Title Insurance – to get fit and proper advice from advisors who understand Sectional Title. www.addsure.co.za.