Questions about community scheme insurance

[Updated: 10 November 2025]

Owners often leave sectional title insurance matters entirely to their trustees. However, that should not stop them from asking questions. For many, their property represents their most valuable investment, and asking the right questions can ensure that their investment is better protected.

Here are some important questions every owner should be asking:

1. When was the last valuation done?

Owners should enquire when the most recent valuation was completed. It is surprising how often schemes overlook this critical aspect.

For bodies corporate, Prescribed Management Rule (PMR) 23(3) requires a valuation to be obtained at least every three years. This is a minimum requirement. Higher-risk schemes are encouraged to do valuations more frequently or obtain interim inflation updates to ensure there is no underinsurance or unnecessary premium expenditure.

Homeowners’ associations should adopt the same approach.

2. Who are our brokers or insurance advisors, and do they understand the community scheme environment?

Schemes benefit from having brokers who truly understand community scheme legislation and dynamics.

For example, fidelity cover requirements under the Community Schemes Ombud Service Act (CSOS) Regulation 15 are far broader than standard fidelity guarantees. When insuring a sectional title scheme, the broker should know how to structure schedules of replacement values (SRVs), manage exclusive use areas (EUAs), apply excess rules, and navigate other unique aspects of scheme insurance.

Schemes that rely on generalist advice risk being underinsured or non-compliant.

3. Who is the insurer, and how were they selected?

Owners should know which insurer covers their scheme and how that insurer was chosen.

Each year, the broker should analyse the body corporate’s insurance before renewal, compare similar products, and provide written advice outlining the recommended cover and reasons for it.

Owners should receive this advice, dated and documented, together with the renewal schedule and policy wording. These are basic FAIS requirements in line with the General Code of Conduct for Authorised Financial Service Providers and Representatives.

4. Do we have adequate fidelity cover as required by the rules and regulations?

All community schemes, sectional title, homeowners’ associations, and share blocks, are required to have fidelity cover in terms of CSOS Regulation 15.

This is often overlooked. In sectional title schemes, fidelity insurance is a compulsory AGM agenda item, giving owners an opportunity to ask whether the policy fully complies with Regulation 15.

5. How are surplus funds invested and protected?

Fidelity cover ties directly to how scheme funds are managed. Owners are entitled to know how surplus or reserve funds are invested and safeguarded.

These funds belong to the owners, so transparency is key. Are the reserve funds maintained in a separate account and reflected in the budget correctly? Proper financial governance protects all members.

6. How are geysers handled under our insurance, and what are the excess terms?

Geysers are one of the most frequent sources of claims in sectional title schemes.

While maintenance of geysers is typically an owner’s responsibility, most community scheme insurers offer geyser cover under the scheme’s policy. Trustees should negotiate excess levels that suit the scheme collectively, perhaps opting for higher excesses to reduce claims ratios or buying back excesses entirely for retirement schemes. The dynamics vary from scheme to scheme.

Many insurers now offer better geyser management options, such as call centre claim validation, photo verification, and stainless-steel geyser programmes.

Whatever approach is taken, it should be clearly communicated to all owners.

7. Where can owners access the insurance policy and details?

The managing agent should keep the latest policy schedule and wording on file. These documents change often, particularly in larger schemes.

Owners can request these at any time and should review their Schedule of Replacement Value (SRV) to confirm that their unit’s insured amount reflects current replacement costs, especially if they’ve done renovations or upgrades.

8. Has the schedule of replacement values (SRV) been correctly prepared?

At the AGM, owners should confirm whether the SRV was properly compiled in accordance with PMR 23(4).

It should be a stand-alone document that reflects the latest valuation, including any additional sums, exclusive use areas, and improvements such as solar panels. Simply reusing the insurer’s schedule without proper review can lead to errors and disputes.

9. Are recoveries correctly applied for Exclusive Use Areas (EUAs)?

Where additional sums appear on the SRV, trustees need to ensure that premiums are recovered from the relevant owners.

In the case of EUAs, these additional insurance costs should be correctly accounted for in the EUA contributions or levies.

10. Are trustees actively mitigating risks?

Trustees play a key role in preventing avoidable losses. Owners should ask what risk-mitigation measures are in place:

• Are roofs inspected annually for leaks or damaged tiles?
• Are gutters and stormwater drains cleaned before the rainy season?
• Are pathways, stairways, and common walls in good condition?

Regular maintenance helps reduce claims, control premiums, and preserve property value.

Final thoughts

A well-run community scheme thrives on transparency and informed participation. Insurance is not just an administrative matter; it protects the collective investment of every owner.

By asking the right questions, owners can help ensure their scheme remains compliant, properly insured, and financially resilient.

Below is a simple checklist with these questions summarised for easy reference and use.