Sectional Title Insurance Advisors need to be aware of the specified insurance references in the Sectional Titles Act and the accompanying prescribed management rules.
SECTIONAL TITLES ACT
S37 – Functions of the body corporate
Section 37 is the legislation applicable to insurance which obligates the trustees to insure the buildings and all improvements to common property to full replacement value, to pay the premiums and ensure that proceeds of any claim are applied to reinstating the buildings.
S45 – Insurance by owners
Provides for owners to dual insure their sections in need. Contrary to usual insurance norms and contracts, the Sectional Titles Act allows owners to further insure their section. This allows owners to cover themselves where they feel there are “gaps” in cover.
PRESCRIBED MANAGEMENT RULES
27 – Signing of documents
This rule provides guidance in respect of the signing of claims documentation (claim forms and agreements of loss).
29.1(a) – Buildings cover
Mandates and guides the trustees by setting out what they should be insuring against and to what extent they should be negotiating terms.
29.2(a) – Liability cover and trustee indemnity cover
This rule specifies that liability cover (property owners’ liability) and trustee indemnity should be arranged to protect the owners and trustees against liability in respect of death, bodily injury, illness or loss or damage to property occurring in connection with the common property.
29.2(b) – Fidelity cover requirement
Clearly sets out the requirement that a general meeting is needed to decide on whether or not, and how much, fidelity over is purchased. Cover against dishonesty of managing agents must be included.
29.4 –Insurance excess
The owner of a section is responsible for any excess payment in respect of his or her section payable in terms of a contract of insurance entered into by the body corporate. This is provided that owners may, by special resolution, determine that the body corporate is responsible for excess payments in respect of specified damage.
Sample Resolution downloadable from http://dev.addsure.co.za/wp-content/uploads/2014/07/Adddsure-29-4-Resolution-sample-template.pdf ; https://www.addsure.co.za/excess-sub-rule-29-4/
68.1 – Maintenance of geysers
This rule deals with the owners’ responsibility in respect of their geysers
Definition of a building – Sectional Titles Act
“Building” means a structure of a permanent nature erected or to be erected, shown on a sectional plan as part of a scheme
Definition of a building – Typical Buildings Policy Wording
“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.”
The difference in these wordings can be discussed at length.
References and Resources / Sectional Title Insurance
- Key-Word Access Sectional Titles Act – Shirley Baillie www.sectionaltitlesact.co.za
- Paddocks Learning and Publishing – Various publications www.paddocks.co.za
- Paddocks Sectional Title Online www.sto.co.za
- Paddocks Club www.paddocksclub.co.za
- Demystifying Sectional Title – www.bbm.co.za
- Sectional Title Insurance Guide – http://dev.addsure.co.za/wp-content/uploads/2014/02/Addsure-Booklet-2011-Sectional-Title.pdf
- NAMA National Association of Managing Agents – www.nama.org.za
- EAAB Estate Agents Affairs Board – www.eaab.org.za
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