The definition of a building

Interestingly, there are various definitions for a “building” and when considering insuring a building, some extra care needs to be taken.

Looking at online dictionaries, one finds definitions such as:

  1. a relatively permanent enclosed construction over a plot of land, having a roof and usually windows and often more than one level, used for any of a wide variety of activities, as living, entertaining, or manufacturing.
  2. anything built or constructed.
  3. the act, business, or practice of constructing houses, office buildings, etc.

According to the Sectional Titles Act:

“Building” means a structure of a permanent nature erected or to be erected and which is shown on a sectional plan as part of a scheme 

A building, according to the definition of a typical buildings policy wording is somewhat differently described.  So, to be clear on what is being covered, we need to look at an actual example sectional title policy and its definition of “buildings”:

“Buildings:  Shall be deemed to include outbuildings and landlord’s fixtures and fittings therein and thereon including fitted carpets and lifts with all associated equipment, transformers, motors, boilers, air conditioning, standby generators and walls (except dam walls), gates, posts, fences (excluding hedges) and sporting/recreational structures including but not limited to swimming pools, tennis courts (including floodlights), sauna/spa baths/ jacuzzis and water pumps, pool machinery borehole motors and brick, tar, concrete or paved roads, driveways, parking areas, paths or patios all the property of the insured and situated as stated in the schedule. Unless otherwise stated in the schedule, the buildings and outbuildings shall be constructed of brick, stone, concrete or metal on metal framework and roofed with slate, tiles, metal, concrete or asbestos.”

This tells us quite a bit about what is being covered. It is clearly all fixed improvements made to the property over and above the land itself. Basically, if it is part of the building, it is usually covered. By being part of, I mean it is a fixture, for example, a fitted carpet, built-in cupboard, light fitting, etc. Contents are excluded and should be covered by an owner’s personal or domestic insurance policy. The land is excluded because if the buildings are totally destroyed, it follows that the land will still be left.

Some important points should be noted from the insurance policy definition.

Take for instance “…and situated as stated in the schedule.” The risk address, i.e. the property itself, will need to be correctly defined. If the buildings defined in a policy extend over to another property or over a number of plots (or erven), take care to note all the erven as the insured properties or at least to make sure that the address is clearly indicated.

Wooden structures or thatch need to be dealt with carefully. It cannot be assumed that wooden structures and thatch roofs will be covered; these are normally not covered according to the insurance policy definition above. Non–covered items such as thatch need to be dealt with separately, i.e. the body corporate trustees need to make it clear to the insurer that the additional risks need to be covered or added to the policy, even if for an additional premium.

However, note that the Sectional Titles Act definition is what is being referred to in the prescribed management rules, so you will need to take extra care in respect of thatch, retaining walls, wooden structures, etc. whether or not they are shown on the sectional plan.

Most insurers apply a loading to the rate if a thatch lapa is bigger than 20sqm and closer than 4m to the building. Important: Owners with lapas need to refer to their brokers or insurance for advice and find out the underwriting requirements under their specific circumstances.

More recently, certain leading underwriting managers have introduced “ALL RISK” type policy wordings which further impact on our understanding of the various definitions. In these policies, the wider definition of the building still remains however, insurers are more specific as to which items are excluded from cover.

The bottom line is, don’t assume all is covered; look at the policy definition and carefully compare it to your building environment.

More about this can be read in The Sectional Title Insurance Guide, downloadable from this website

 

Author : Mike Addison

Contact Addsure – The Leaders in Sectional Title Insurance – to get fit and proper advice from advisors who understand sectional title. Contact us in Johannesburg on (011) 704-3858; in Durban on (031) 459-1795 and in Cape Town on (021) 551-5069