While trustees have a fiduciary duty to comprehensively insure the scheme, managing agents often take care of insurance obligations on behalf of the body corporate.
Schedule of Replacement Values (SRV)
The most important responsibility is to prepare the SRV based on their most recent valuation plus escalations for inflation. Make sure that this matches the policy endorsement reflecting unit values. (The policy is based on the Schedule of Replacement values – not the other way around).
A copy of the new proposed SRV should be included in the AGM pack for approval at the AGM. Also, ensure that a copy of the most recent valuation is available for presentation or reference at the AGM.
It is necessary to prepare fresh figures for fidelity insurance and to have the liability cover figure ready and available for discussion at the AGM.
It is preferable to have your insurance advisor at the AGM or for them to provide a written insurance report covering the insurance-related agenda items:
- Approval of the SRV
- Determination of the Extent of Insurance Cover
- Liability (PMR 23(6))
- Fidelity (PMR 23(7))
- Additional Cover (PMR 23(8))
The chairperson is expected to deliver this part of the agenda at the AGM for approval and voting.
In summary, the insurance checklist for the AGM is as follows:
- SRV to be prepared
- Copy of valuation (done within last three years) should be at hand
- Fresh fidelity figures to be prepared
- Liability figures (more than R10million) to be available
- Any other cover required, e.g. gym equipment and general liability
The AGM Insurance Guide is a useful tool for your next AGM. It may be a good idea to include this with the SRV in the AGM pack.
Author: Mike Addison
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