A common question that often arises around the issue of water tanks are: “Are water storage tanks (or Jo-Jo tanks) covered by the body corporate or home owners’ association buildings insurance policy and if so, what are the limitations?”
Water storage tanks
As a result of water shortages and related usage restrictions – especially in the Western and Eastern Cape – it has become very common for owners and bodies corporate to install large water storage tanks on common property (gardens) or exclusive use areas. These tanks can be plumbed into units for toilet flushing, washing machine use and garden irrigation use.
The tanks are most often placed on a prepared flat surface close to rainwater gutter down pipes so the rainwater can easily be channeled into an opening on top of the tank. These tanks vary in capacity and size – from 1 000 to 5 000 litre (or more) – and can cost anything from R3 000 to R20 000 (or more) to install with tap connections, piping and pump adaption for reticulation.
These exterior tanks are either improvements that are deemed to be landlord’s external fixtures or fittings or common property contents. The installation or equipment does not qualify as machinery; therefore, machinery breakdown cover is not extended to these installations. Only a pump motor is included in the machinery breakdown cover provided in the policy.
We have approached three specialist underwriters or insurers for comment. Based on their input, we suggest the following:
- A standard perils-based insurance policy covers the tanks for specified events only, for example: Sudden damage caused by earthquake, fire, flood, impact by vehicle or aircraft, and explosion. In the case of a broad form asset all risk policy, any sudden damage is covered unless otherwise specifically excluded.
- Depending on the insurer, limited cover – if any – is provided in event of theft to these installations, usually between R10 000 and R20 000. Check your policy cover limit as may apply. It is highly unlikely that an entire tank will get stolen but rather certain exposed components. Policy excess (first amount payable by the insured) applies in the event of any claim; this would negate any smaller or frivolous claims. Should wider cover be required (to include theft), we recommend the tanks be specified for cover on an all risk basis.
- In the event of a catastrophe claim event – where the entire tank may be damaged or destroyed – the insurers could call for proof or substantiation of value. If your common property tank/s hold a substantial re-instatement value, it would be prudent to note this value in the policy as part of common property improvements.
Author: Brian Addison
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