Sectional title and political riot cover

Standard building insurance policies generally exclude cover for damages caused by political riot, labour disturbance, or public disorder. These perils, including war, invasion by foreign forces and terrorism, are general exclusions from cover provided by all policies.

SASRIA cover

In South Africa, we are fortunate to have access to SASRIA cover in the event of damages caused by political riot, labour disturbance and/or public disorder.

The Sectional Titles Schemes Management Act 8 of 2011, Regulation 3 (b), makes it clear that a body corporate needs to include this cover.

SASRIA Ltd is a short-term insurance company that is state-owned. It is a Schedule 3B Public Entity and reports directly to the National Treasury.

Background history

As far back as 1979, at a time in our history when the insurance companies were reluctant to provide cover for political risks, a gap arose in the market that prompted the then national government to approach the South African Insurance Association (SAIA) regarding the establishment of a separate institution/entity to provide insurance for political riot risks. A Section 21 Company was formed called ‘South African Special Risk Insurance Association (SASRIA). In 1998, the cover was widened to include non-political perils such as strikes and labour disturbances.

How it works in the event of a SASRIA claim.

The insurance companies act as agents for SASRIA, where a client elects to include the cover. Any material damage claim caused by ‘riot’ is submitted via the agent insurer to the SASRIA offices for processing. Your insurer does not incur the risk or pay/settle the claim themselves, but rather SASRIA do, as facilitated by your insurer. This claim process can take a bit longer than usual as the circumstances of the event/loss are carefully investigated.

Finalising claims takes a long time

It has been our experience that, in these claim events, clients are most often found short of financial resources to attend to repairs to the buildings (especially immediate urgent repairs to windows, doors, security entrance gates, fencing, etc.) The reality here is that it can take a minimum of six weeks, and as long as three to four months, to finalise larger claims where more extensive damages to buildings prevail.

Sectional Title policies, by design, will usually include this cover – trustees, ensure that your broker understands sectional title. SASRIA cover is currently capped at a maximum limit of indemnity of R500 million. It is highly unlikely that increased cover would be required, especially where an estate housing complex buildings are spread over a larger area, rather than a substantial single risk tower block structure.