New business quotes from insurance companies are subject to acceptance by the insurance company and their right to inspect the buildings to satisfy themselves that the buildings are an acceptable risk.
Insurance companies will request and conduct surveys on selected buildings based upon disclosed occupation (commercial/industrial/residential), the insured value of the building as well as the position and location of the building (proximity to water edge or industrial area, etc.)
The most important focus is on whether the legislative regulations and requirements with regard to fire protection equipment are being complied with. Any further hazardous activity and dangers may also be noted as being of higher than normal risk. By informing the insured client of any non-compliances, the insurance company is best able to reduce exposure to potential losses, not only for own account but for the insured client’s financial security.
Notwithstanding that a risk survey has been attended over the insured buildings, that does not relieve the property owner of their duty and responsibility to make any further disclosures of all material facts that could influence the insurability of the buildings. Any changes to occupancy risk should be advised to the insurers on an ongoing basis as they arise. An insurer risk survey does not supersede or relax any legislation or national building standards that apply to the buildings.
The general condition of the buildings is also checked as not only can failed or neglected maintenance lead to consequential damage to the buildings but it can also lead to liability losses by way of injury or even death of visitors, guests or occupants of the building. It is then fair to assume that if a survey reveals a visibly poor state of electrical wiring, the insurers may insist upon, and apply terms that stipulate, the insured providing an electrical compliance certificate.
It is important to realise that an insurance risk survey is not:
(a) A structural engineers report in confirmation of the structural integrity of the building or any part thereof. (b) Neither is it a geo-technical report confirming integrity of underlying soils or rock strata, or a climatologist report confirming flood or lightning exposure.
The contents of the survey report remain the confidential property of the insurer. A risk survey does not validate insured values. The property owner is responsible to ensure that the building and related improvements are adequately insured for value.
Author: Brian 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 (011) 704-3858; Durban (031) 459-1795; Cape Town (021) 551-5069