The Sectional Titles Schemes Management Act, the regulations and the prescribed management rules set out what needs to be covered. The trustees, together with a suitably experienced and qualified insurance advisor need to ensure that the selected insurance product meet both the legislative or regulatory requirements as well as the needs of the community scheme.
The rules and regulations impact on the insurance. In the table below we compare present policies against the rules and regulations. Please note that this is an example and may not apply to your specific scheme:
Act / Regulation / Rule Requirement | Typical Building Policy | Note |
Fire, lightning, explosion and smoke | Fire, lightning, explosion | Smoke damage being met by some insurers |
Riot, civil commotion, strikes, lock-outs, labour disturbances | Covered under Sasria coupon | |
Storm, tempest, windstorm, hail and flood | Storm, wind, water, hail or snow | Retaining walls not covered or only conditionally covered. Excludes wear and tear or gradual deterioration. Excludes cover where process includes the application of water. |
Earthquake and subsidence | Earthquake covered Subsidence often excluded | Earthquake could be limited. Subsidence compulsory but either not covered or very limited in cover and/or expensive. |
Water escape including bursting or overflowing of water tanks, apparatus or pipes | Bursting or overflowing of water tanks, apparatus or pipes | Water escape could be problematic. Excludes wear and tear or gradual deterioration. |
Impact by aircraft and vehicles | Covered more widely | |
Housebreaking or any such attempt | Damage to the buildings caused by break in is covered |
The new rules and regulations still need to be tweaked.
Noticeable omissions include “loss of occupation or loss of rent” in respect of insured events and the preamble in previous PMR 29.(1)(a) which included “subject to negotiation of such excess, premiums and insurance rates as in the opinion of trustees are most beneficial to the owners”
We also feel that “subsidence” could have been excluded from being compulsory and that “accidental damage” should have been brought in.
It is recommended that these omissions be borne in mind and still included in policies going forward. Where subsidence is not covered, owners must be made aware and the insurance brokers’ advice in this regard properly noted.
What is covered?
We’ve always used the analogy of a dollhouse: shake it, turn it upside down, and whatever stays intact should be covered. Simply put, buildings cover is designed to protect owners against sudden and unforeseen damage to the buildings (excluding contents) and improvements to common property caused by an insured peril. This, of course, excludes damage resulting from wear and tear or gradual deterioration. While there are conditions and exclusions, owners can take comfort in knowing that South African insurers currently provide community schemes with extensive building (material damage) cover—far more comprehensive than what was available 25 years ago.
*More information about the rules and regulations can be found in our Sectional Title Insurance Guide, which you can download via the button below.
Author: Mike Addison
Addsure is a leading sectional title insurance broker. Get fit and proper advice from advisors who understand sectional title.