Sectional Title Geyser Claims: What you need to know about limits and excess payments

One of the most common questions that arise relating to geyser claims in a sectional title scheme is: “Who is responsible for the excess, and if the replacement or repair costs of a geyser or hot water installation exceeds the limit set out by the insurer, who will be responsible for the shortfall?”

Assuming that Prescribed Management Rules (PMRs) apply to the scheme, we look at PMR 31 (geysers) and PMR 23.(2)(b) (excess) for direction.

PMR 31 states the following:

Notwithstanding that a water-heating installation forms part of the common property and is insured by the body corporate, a member must maintain, repair and, when necessary, replace such an installation which serves that member’s section or exclusive use area; provided that where such an installation serves sections owned, or exclusive use areas held by more than one member, the members concerned must share the maintenance, repair and replacement costs on a pro-rata basis.

Thus, strictly in terms of this rule, the body corporate should not insure the geyser for maintenance or wear and tear replacement as the owner is responsible for this cost and any uninsured portion, whether on common property or not, will be for the owner’s account.

PMR 23.(2)(b) states:

A member is responsible –

(b) for any excess amount that relates to damage to any part of the buildings that the member is obliged to repair and maintain in terms of the Act or these rules, and must furnish the body corporate with written proof from the insurer of payment of that amount within seven days of written request.

It follows then, as PMR 31 makes the owner responsible to “maintain, repair and, when necessary, replace”, that the owner is responsible for the excess (first amount payable) as well.

For that reason, it is clear that the owner must pay both the excess and any uninsured portion of the water heating installation.

Typically, a policy is structured with certain default limits and geyser excesses for replacements and repairs. Some policies can be structured with increased limits such as catering for a better-quality, stainless-steel geyser which will usually involve a slight increase. Likewise, some insurers will allow for a geyser excess buy-back option.

In most cases, it pays for owners to utilise the insurer’s geyser call centre where applicable. This usually ensures that the replacement or repair is done within the price range limits and has the added advantage that any comebacks can be referred to the insurer. This also means that process is paperless, with the cash flow and administrative advantage whereby the contractor invoices the insurer directly.