Insurance & the EUA

The body corporate must insure the buildings and all improvements to the common property. An exclusive use area (EUA) is common property, thus it follows that any improvement thereon must be insured by the body corporate’s insurance policy. It is the writer’s view that permission granted by trustees to owners for improvements to EUA’s can’t be conditional upon the owner insuring such improvements themselves.  We sometimes see this where an owner wishes to install an awning in their EUA garden, or shade port over EUA parking. Naturally, the additional insurance costs (premiums) for these exclusive use improvements would be for the account of that owner, either directly or by way of that owner’s EUA contribution towards the body corporate’s administrative fund.

Any improvement to the EUA, e.g. a swimming pool, is not shown as an addition to the section / unit insured sum total. This mistake happens often. By adding the replacement cost of the swimming pool or other common area items, such as awnings, under “additional” increases the unit’s sum insured when the EUA improvement is still common property.

Another common mistake trustees make is not taking care in respect of safety. Very often trustees perceive that EUA safety as not their responsibility. For example, if a gate that allows access from the common area to an owner’s EUA which has a swimming pool is broken, the trustees should see to their repair. Very often trustees don’t as they think it is the owner’s responsibility. The cost can be charged to that owner but the maintenance and safety aspects remain with the trustees. Owners must keep the area neat and clean but the actual responsibility to maintain remains with the trustees unless the rules state otherwise.

Trustees and portfolio managers should take care when providing their insurance brokers with information. If only the sectional plan is handed to the broker and the broker is instructed to insure the buildings as shown in the plans for a certain sum per square metre, the garages or other EUA buildings could be omitted if created in terms of the rules. It is always a good idea to provide a broker with the EUA diagram / rule as well. While the EUA buildings would not really be excluded from cover, by omitting to account for EUA buildings, the overall replacement value of the buildings could be inadvertently under-valued.

This is another good reason to work with an insurance advisor who is well versed in sectional title matters.

 

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