Insuring community scheme store rooms

In this blog, we delve into the rental of common property store rooms and the effect on insurance.

Usually, a special resolution needs to be in place for each instance. From an insurance perspective, it is always a good idea to see to it that the correct administration has been completed so the insurer cannot argue that the loss occurred due to the change in intended use of the store room. The reality is that poor management allows owners and tenants to use common property areas or store rooms at will thereby increasing risk of fire and liability that can directly be linked to cause.

Some sectional title legal experts suggest that conduct rules should be created to allow for the dos and don’ts when store rooms are rented out. This may help at claims stage to clarify the issue.

We believe that some of the following items should either not be stored and/or carefully stored where the store room is meant for residential storage:

  1. Flammable materials, e.g. gas, paints, thinners, turpentine, petrol (*see note below)
  2. Fireworks, ammunition, explosives
  3. Business stock which could give rise to fire, e.g. batteries, chemicals.
  4. Poisons, narcotics or other dangerous materials
  5. Live pets, e.g. caged reptiles, rodents etc.
  6. Items which pose a nuisance such as noise or odour
  7. Loose food Items (unsealed) which could attract vermin or insects
  8. Perishable items which could cause unpleasant odours
  9. Rotting or large amounts of cardboard or paper

* A domestic property shouldn’t have more than a few litres of paint or a couple of litres of flammable liquids stored for any extended period of time. Any items being stored must be strictly for private use only and not commercial use (for retailing or income creation). Any stored paints should be on shelves (tins on floors tend to rust more easily) and always kept sealed.

Store rooms should be locked, clean and kept safe. Vermin around cardboard and paper have been known to make area more easily combustible. If a store room is left open in error, a child finds their way inside and is injured, the user of the store room will be held liable. As a common area storeroom, safety remains a trustee responsibility.

The lessees (users of store rooms) should agree to indemnify the body corporate against any losses occurring as a result of theft or otherwise, e.g. penetration of water, storm damage etc. Lessees remain responsible for their own goods.

Some legal advisors recommend that a clause is added to the lease agreement that the body corporate can terminate the lease at any time. Ensure that tenants of the store rooms do not think that the store rooms belong to them by keeping the rentals on shorter, renewable leases.

These suggested approaches are not strict conditions or rules laid down by insurers but rather some preventative care concepts drawn from our experience working with many bodies corporate around the country. Insurers can reject a claim where they can show that preventive measures were not observed or where there was a clear lack of care. Trustees should endeavor to find the most reasonable precautions given the environment of the particular scheme.

 

Authors: Bruce Gibson, Rian Pienaar, Brian Addison and Mike Addison

Contact Addsure – The Leaders in Sectional Title Insurance – for 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