Practical steps to deal with sectional title insurance

[Updated: 10 July 2025]

The purpose of this article is to provide trustees with a simple, practical approach to handling the all-important insurance matters of their scheme.

There is no prescribed starting point when it comes to insurance, and this lack of clarity is often the reason trustees overlook critical aspects. The good news is that a few clear steps can make all the difference. We break the trustees’ action into three phases or areas, namely, where to start, ahead of the next AGM and when the policy comes up for renewal.

Where to start

 A natural starting point is right after the Annual General Meeting (AGM) – whether you’re a first-time trustee or re-elected. It’s the ideal time to assess, review, and take action.

References to Prescribed Management Rules (PMRs) can be found in the Sectional Title Insurance Guide, downloadable via the blue button below.

Step 1: Review the AGM insurance approval.

Begin by reviewing what was presented and approved at the AGM. Then check the following:

• Schedule of replacement values (SRV)

Was an SRV presented in terms of PMR 23(4), and was it based on a professional valuation as required by PMR 23(3)?

Confirm that the insurance policy reflects the approved SRV, including correct sums insured for units, exclusive use areas, and any structural additions, per PMR 23.1(b).

• Liability cover

Ensure the approved liability amount is correctly applied to the policy.

• Fidelity guarantee cover

Confirm that the agreed amount (as voted on) is in place and correctly reflected in the policy.

Step 2: Get the right documentation

Request the following documents from your managing agent or insurance broker:

• The updated policy schedule
• The full policy wording
• Record of advice (also called the letter of advice or LOA) from the broker at the time of the last renewal.

The record of advice or letter of advice is most important. If the LOA hasn’t been provided, now is the time to insist on it, or consider seeking a second opinion from a broker specialising in sectional title insurance. It is a Financial and Intermediary Services Act (FAIS) requirement, specifically in terms of the conduct rules. This places an obligation on the broker to provide this, but importantly, a responsibility on the trustees and managing agent to ensure that this is forthcoming.

Carefully read the LOA. It often contains crucial recommendations such as switching insurers, upgrading cover, or reducing premiums, guidance which, if ignored, could prejudice the scheme. Ideally, meet with the broker to clarify anything you’re unsure of.

Step 3: On-site meeting with the broker

A site meeting is invaluable. Walk the property with the broker and highlight any areas of interest or concern, such as:

• Swimming pools and children’s play areas
• Retaining walls
• Structural additions or renovations
• Solar panels, boreholes, or other water-saving infrastructure
• The geyser or hot water system setup

Ask for advice on loss prevention and risk mitigation, particularly if there is a history of frequent claims.

Step 4: Review the valuation cycle

Check when the last professional valuation was done. Although PMR 23(3) requires one at least every three years, this is often misinterpreted as only every three years.

Discuss with your broker whether the valuation on record is still reliable, especially in light of construction cost escalations. An updated valuation may be required sooner.

Step 5: Plan and implement

Based on your findings and broker recommendations, start putting procedures in place. For example, if it is recommended that geyser claims should go through a call centre, and if agreed to, formalise the claims process and ensure all owners are informed.

When the policy comes up for renewal

 Approximately 3 to 4 weeks before renewal, the broker should issue a renewal invitation via the managing agent. This pack should include:

• Letter of advice (LOA)

A clear, easy-to-read summary of the renewal terms, comparative analysis, and recommendations.

• Renewal pack (RP)

Contains full quotes, claims history, and other supporting documentation.

• Schedule of replacement values (SRV)

A draft for approval at the next AGM, prepared in line with PMR 23(4).

Where possible, the broker should present the renewal to the trustees, either in person or via a short video explainer (a service Addsure often provides). This video can also serve as a record of advice.

Trustees should meet (or circulate via round-robin) to approve the renewal, document their decision, and sign the LOA. A signed copy should be returned to the broker for their records.

Ahead of the next AGM

As part of the AGM notice pack, ensure the following insurance-related items are prepared and included:

SRV and valuation

The SRV must be presented to owners at the AGM with the valuation available for inspection, per PMR 23(3). Use the latest SRV from the broker, or request an updated copy if needed.

Liability cover

Confirm and record the sum insured, ensuring it meets the minimum R10 million (most compliant schemes carry R50–100 million).

Fidelity cover

This must be voted on annually in terms of CSOS Regulation 15. Ensure the amount aligns with expected funds held, especially where special levies are being collected. Ask your broker for input.

Additional cover

If the scheme needs extra cover (e.g., insuring golf carts or taking out legal expense insurance), a special resolution may be needed. Table this with adequate notice.

In summary

By following these practical steps and engaging proactively with a professional insurance advisor, trustees can ensure that their scheme’s insurance is well-managed, compliant, and structured to reduce risk. With good planning, most risks become manageable, if not avoidable.