Liability made simple

Damage happens. Injuries happen. That doesn’t automatically mean the body corporate is liable.

Clearing up this one point can clear up many disputes and liability claims in sectional title schemes.

So, what is liability cover and when does it actually apply?

In a sectional title context, liability cover is more accurately referred to as property owners liability insurance.

This cover is required in terms of the prescribed management rules under the Sectional Titles Schemes Management Act 8 of 2011 (PMR 23.(6) and is typically discussed and voted on at the AGM (prescribed order of business per PMR 17).  A body corporate is expected to carry a minimum level of cover (presently prescribed to be not less than R10 million), although in practice, limits of R50 million or even R100 million are far more appropriate today.

The purpose of this cover is to protect the body corporate itself against claims where it is alleged to be legally responsible for bodily injury, death or illness or damage to a third party’s property, arising on or in connection with the common property.

The key principle is negligence, and this is the most important concept for trustees and the applicant (claimant) to understand.

Liability insurance does not automatically pay just because damage or injury occurred on common property.

The question is always – was the body corporate negligent?

In other words, for example:

• Did the body corporate fail to maintain something properly?
• Did it ignore a known issue?
• Could the incident reasonably have been prevented?

If the answer is yes, there may be a valid claim.

If the answer is no, then there is usually no liability, even if the incident is unfortunate.

A practical and common example is the gate and the motor vehicle

Let’s say that a resident drives through the entrance gate and the gate closes onto their vehicle, causing damage.

The immediate reaction is usually: “The gate damaged my car, so the body corporate must pay.”

But this is not how liability works.

Scenario 1 – No negligence

If the gate was regularly maintained and this was a once-off malfunction, then the body corporate is not negligent, and the insurer will likely defend the claim and reject the third party’s approach (demand). In simple terms, bad luck, not liability

Scenario 2 – Negligence exists

Now consider a situation where the gate has been faulty for weeks, complaints were raised and the trustees failed to act.

If this can be proven, then the body corporate may well be found to be negligent and thus the insurer may decide not to defend but rather negotiate a settlement with the third party.

This is where liability cover becomes critical.

An important point often overlooked –  The insurer’s first job is to defend the body corporate

When a claim is made

• The third party submits a letter of demand (this triggers a claim)
• The body corporate submits a liability claim to the insurer
• The insurer investigates

If there is no negligence, then the claim is rejected

If there is possible negligence, then the insurer may negotiate or settle

What liability cover actually protects

In simple terms, liability cover protects the body corporate against:

Claims for damage to property

Claims for injury, illness or death

…where those claims arise due to negligence on the part of the body corporate, pertaining to the buildings.

It does not act as a general “repair fund” or “medical aid” for anything that happens on common property.

Final thoughts

Liability cover is not about paying every third party’s damages or injury claim, it’s about protecting the body corporate when it is legally responsible and defending it when it’s not.

Understanding this distinction helps manage expectations and reduces unnecessary conflict between third parties (often owners themselves), trustees, and managing agents. Remember, managing agents are usually roped in as co-defendants.

No negligence = no claim

If negligence can be proven = policy usually responds

That’s liability made simple.