A boundary serves as a dividing structure between two pieces of land and a retaining wall serves to split levels of ground in order to prevent the higher level from subsiding onto the lower level.
Therefore, a retaining wall carries a much higher risk than a simple boundary wall. This is also the reason why insurers insist on an engineer’s report submitted by a qualified structural engineer on the condition of the wall. Based on the report insurers will then decide to:
- Accept or decline insurance cover on the wall, and
- Calculate a premium rate relevant to the risk.
While a retaining wall usually forms part of the common property, insurers need to apply a premium cost in line with the higher risk associated with such a wall. By not specifying the retaining wall, an insurer will be prejudiced as they haven’t had the opportunity to evaluate the risk in the event of a collapsing retaining wall. Policies exclude retaining walls for storm and water perils by default, unless specific cover is sought.
How does the Sectional Title Schemes Management Act deal with retaining walls?
Section 3 (1) (i) requires bodies corporate, in particular trustees, “….to insure against such other risks as the owners may by special resolution determine.” This section applies to any structure not specifically mentioned in the entire section 3 so it includes retaining walls which is otherwise not fully covered.
Insurers do not do risk surveys on a regular basis and it is also not the insurer’s responsibility to highlight the existence of retaining walls to bodies corporate – the insurance contract excludes most of the retaining wall cover. The responsibility lies with the body corporate or insurance adviser of the body corporate. Professional valuators normally indicate the existence of retaining walls and also apply a replacement value for the wall in the event of destruction by an insured peril. This enables an insurance adviser or body corporate to negotiate a premium to properly insure the retaining wall.
Addsure advises clients by way of written advice, workshops and formal booklets. Trustees are ultimately responsible especially where advice has been provided.
Author: Rian Pienaar, 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