The Sectional Titles Act, Prescribed Rules and the FAIS Act needs to be considered when processing claim forms. While embracing new technologies, call centres, apps, etc. we need to consider all aspects to ensure that trustees, managing agents and owners deal with claims in a legally correct manner.
Basically, insurance is a contract in which one party – the insured – pays money (a premium) and the other party promises to reimburse the first for certain types of losses (illness, property damage or death) if any of these occur under certain circumstances. Once a defined loss occurs, the insured has the right to claim.
To claim, by definition is to demand or assert a right. Facts combine to give rise to a legally enforceable right or judicial action. A demand for relief. A claim is something that one party owes another. A claim also means an interest in – as in a possessory claim – or right to possession, or a claim of title to land. In the insurance context, once a loss is defined in the policy contract occurs, the insured has a right to claim financial relief from the insurer.
As set out in Section 3.(1) of the Sectional Title Schemes Management Act, the insured is the body corporate. The body corporate makes the claims. Although contractually insured for their respective rights and interests, the individual owner is effectively a witness in respect of the parties to a claim in the sectional title environment.
The claim form is a formal document in a format determined by the insurer. The insured (in this case, the body corporate) should use this format in the submission of any claim. In order for the insurer to admit any claim, the insurer (insurance company) will need some basic information to prove the claim; they should have enough information to prove that the stated loss occurred.
A claim is a legal demand, usually on the insurer’s claim form.
Prescribed Management Rule 10.(1) states that:
No document signed on behalf of the body corporate is valid and binding unless it is signed on the authority of a trustee resolution by:
- Two trustees or the managing agent, in the case of a clearance certificate issued by the body corporate in terms of section 15B(3)(i)(aa) of the Sectional Titles Act; and
- Two trustees or one trustee and the managing agent, in the case of any other document.
A claim form is an important document and requires validation in terms of this rule.
A geyser, according to geyser maintenance rule (PMR 31) states:
“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”.
It can thus be argued that insurance claims pertaining to the maintenance and replacement of the water-heating installation, should be the owner’s responsibility and thus the owner should take a measure of control and responsibility over the reinstatement of that asset.
It is clear from the aforesaid then, that the body corporate should deal with all claims with the exception of geyser claims which may be dealt with by the owners themselves.
An owner need to take immediate action to remedy the loss, especially if damage is caused. It makes sense for an owner to engage directly with the insurance call centres or insurer’s plumbers ahead of obtaining a trustee’s or managing agent’s signature in terms of Rule 10.
There is no doubt that the sooner the insurer is informed of damages, the sooner action and preventative measures can be taken. More recently, call centres and online claim processes and claim applications (apps) on hand held devices such as tablets, smart phones and laptops are becoming a norm. The days of simply emailing a client a blank claim form in response to a claim advice is no longer acceptable or the norm.
Online claim processes including apps, form-fill claim forms, old version claim forms and call centres are all procedures that must be combined to serve needs and capability of all owners.
In doing so, we need to be mindful of the law such as the laws pertaining to sectional title in respect of parties, signing, etc. as well as FAIS laws (Financial Advisory and Intermediary Services Act) in respect of intermediary services and who may process and deal with the claim itself.
We believe that managing agents should position themselves as the post office as far as possible. They can sign claim forms to ratify documentation rather than taking a broker’s role, i.e. not processing claims but submitting the claim.
The insurance broker should be processing legitimate claims, passing these onto the insurance company and monitoring the process on behalf of the client body corporate. In receiving, submitting or processing the claims of a client against a product supplier, the broker is providing an intermediary service by definition and needs to be a registered financial services provider.
- Claim forms need to be correctly signed. See example.
- Electronically submitted or app submissions or call centre claims need to be appropriately authorised.
- Managing agents should take care in their role in attending to claims and services
Author: Mike Addison, Addsure
Contact Addsure – The Leaders in Sectional Title Insurance – for fit and proper advice from advisors who understand Sectional Title. Contact us in Johannesburg (011) 704-3858; Durban (031) 459-1795; Cape Town (021) 551-5069