The difference between retaining walls and boundary walls

A boundary wall serves as a dividing structure between two pieces of land (defines boundaries) and a retaining wall serves to split levels of ground to prevent the higher level from subsiding onto the lower level.

Retaining walls

Therefore, a retaining wall carries a much higher risk than a simple boundary wall. Some risks associated with retaining walls include:

• Failure under pressure: If a retaining wall is not designed to withstand the lateral pressure from the soil or water it retains, there is a risk of wall failure, which can result in soil erosion, landslides, or damage to nearby structures.
• Drainage issues: Adequate drainage behind the retaining wall is crucial to prevent water accumulation, which can increase hydrostatic pressure and weaken the structure.
• Poor construction: Insufficient reinforcement or inadequate construction techniques may compromise the stability and strength of the retaining wall, making it susceptible to collapse or displacement.

By default, a retaining wall is not normally covered or at most, only conditionally covered against storm, wind, water, hail, or snow. Where an application is made for retaining wall cover, insurers will almost certainly insist on an engineer’s report submitted by a qualified structural engineer on the condition of the wall. Based on the report insurers will then decide to:

Accept or decline insurance cover on the wall, and calculate a premium rate relevant to the risk.

While a retaining wall usually forms part of the common property, insurers need to apply a premium cost in line with the higher risk associated with such a wall. By not specifying the retaining wall, an insurer will be prejudiced as they haven’t had the opportunity to evaluate the risk in the event of a collapsing retaining wall. Policies exclude retaining walls for storm and water perils by default unless specific cover is sought.

How does the Sectional Title Schemes Management Act deal with retaining walls?

Section 3 (1) (i) requires bodies corporate, in particular trustees, “….to insure against such other risks as the owners may by special resolution determine.” This section applies to any structure not specifically mentioned in the entire section 3 so it includes retaining walls which is otherwise not fully covered. Section 3.(1) refers to building or buildings which implies that it must be shown on the sectional plan by definition. Regulation 3 sets out the risks.

While we endeavour to insure the buildings and all improvements to the common property, it is often debatable whether certain retaining walls are deemed “buildings” or “improvements” or just serious “landscaping”. For that reason, it is important that the scheme’s valuer set out the retaining walls deemed part of the buildings for replacement cost purposes.

Insurers do not do risk surveys on a regular basis and it is also not the insurer’s responsibility to highlight the existence of retaining walls to bodies corporate – the insurance contract mostly excludes retaining wall cover by default. Professional valuators normally indicate the existence of retaining walls and also apply a replacement value for the wall in the event of destruction by an insured peril. This enables an insurance adviser or body corporate to negotiate a premium to properly insure the retaining wall if the insurer is willing to consider doing so.

Addsure advises and reminds clients about this by way of written advice (annual record of advice), workshops, webinars, explainers, articles and booklets. Trustees need to be aware of what is and what is not covered and should be better informed by way of the advice provided.

Boundary walls

While retaining walls are high risk, boundary walls also carry a measure of risk and at claims stage, losses often rejected where the cause of damage is found to be defective design or workmanship.

Some risks associated with boundary walls:

• Structural integrity: If the boundary wall is not built properly or lacks adequate reinforcement, it may be susceptible to collapse or damage during earthquakes, storms, or other natural disasters.
• Drainage issues: Poor drainage systems around the boundary wall can lead to water accumulation, resulting in potential damage to the structure over time.
• Unauthorised access: In some cases, boundary walls can be used as a means to gain unauthorized access to a property. Therefore, ensuring proper security measures like gates or fences is essential.
• Often, boundary walls start retaining soil and soon start functioning as a retaining wall, for which they were not designed.
• Walls are interfered with, heightened, or overgrown with vegetation which can lead to instability.

It is good practice for the scheme to have a building expert or structural engineer look at the walls (both boundary and retaining) and report on any risks that may be apparent.