Here we focus on the buildings aspect of sectional title insurance, one of the three main areas being buildings, property owner’s liability and fidelity cover.
We often hear the same simple question:
“Just tell me what I’m covered for, and what I’m not covered for, in simple terms.”
Most owners are not looking for a full insurance lecture, lengthy policy wording, or detailed legal explanations. They simply want a practical understanding of what the body corporate insurance generally covers, what it does not cover, and what they should expect if something goes wrong.
In a busy world, with so much information overload and noise, most homeowners simply want the basics.
This article is aimed particularly at first-time homeowners and sectional title owners who want a simple, practical overview of how sectional title building insurance generally works.
Understanding the basics first
The first important point is that sectional title insurance arranged by the body corporate generally covers the buildings and not your personal contents.
Your furniture, clothing, electronics, appliances, portable items and personal belongings are usually insured separately under your own household contents insurance policy.
So, when we speak about sectional title insurance here, we are mainly referring to the building itself and fixtures forming part of the insured property, both inside and outside the building. The building needs to be insured as a whole; hence sectional title legislation has provided for this. Parts covered include the structure of the building, i.e. the bricks and mortar, roofing, etc. as well as fixtures and fittings of a permanent nature such as tiles, kitchen counters, built in kitchens and built in cupboards, fitted carpets, laminate flooring, tap fittings, light fittings, etc.
Insurance can become overwhelming very quickly. On the one hand, brokers are obliged to provide detailed information and explain policy terms properly. On the other hand, many owners simply want practical guidance in plain language.
That is why we often break insurance information into smaller, easier-to-understand formats, including:
- The Sectional Title Insurance Guide, a more detailed guide dealing with legislation, insurance principles and sectional title insurance generally.
- My Home Insurance, Sectional Title which is a simpler homeowner-focused guide aimed particularly at new homeowners wanting a practical understanding of common insurance scenarios.
Both these booklets are downloadable below.
What risks are owners typically covered for?
While every policy differs, and policy wording always remains important, the following are examples of items that are generally covered under sectional title building insurance policies we work with.
- Fire, lightning and explosion
This is one of the most important insured risks.
If there is a fire in a unit or common property area, owners naturally expect the buildings insurance to respond properly.
Fire, lightning and explosion are fundamental insured perils under sectional title insurance. Smoke damage is also mentioned although not always available in certain policies.
- Storm, wind, hail and snow damage
Typical storm-related damage is generally covered, including damage caused by wind, hail, storm and snow. This can include roof damage, water ingress resulting from sudden storm events, or damage caused by severe weather conditions.
- Burst pipes and escape of water
Sudden pipe bursts are typically covered, however, there is an important distinction:
A sudden burst pipe may be covered.
A pipe leaking over time due to corrosion, wear and tear, or gradual deterioration is usually not covered.
This distinction between sudden and unforeseen damage versus gradual deterioration is extremely important in insurance.
- Geyser claims
Interestingly, many insurers will often cover old worn geysers when they fail, even though wear and tear itself is ordinarily excluded. A special geyser maintenance section of the policy usually provides for this. Burst geysers, including those that have become “worn out” and resultant damage are thus defined insured events under most sectional title policies.
- Impact damage
If a vehicle crashes into a gate, wall, or building structure, the damage would generally be covered.
This falls under accidental or impact-related damage.
- Accidental damage
Most policies provide accidental damage cover for sudden accidental events. For example, accidentally dropping a heavy object onto a basin, spilling paint, sudden accidental damage to insured fixtures.
- Flood and sudden water damage
Flood damage or sudden water damage from an insured event is normally covered.
Examples could include, a river overflowing, sudden flooding, major pipe bursts causing flooding damage. Provided no exclusion applies to the circumstances, these events are generally insurable.
- Damage caused during burglary or forced entry
If burglars break open a door or damage part of the building while gaining access, the resulting building damage would generally be covered.
What owners are often NOT covered for
This is usually the part owners are most interested in.
Many insurance disputes arise because owners assume something is covered when it actually falls under maintenance, wear and tear, or gradual deterioration.
- Waterproofing failures and long-term water ingress
One of the most common misunderstandings relates to leaking balconies, flat roofs and waterproofing failures.
If water penetrates over time because waterproofing has failed, this is generally considered a maintenance issue and is ordinarily not covered.
Examples include long-term balcony leaks, failed roof waterproofing, slow water ingress during rainy seasons, ongoing seepage over time
Some insurers may assist with sudden resultant damage in limited circumstances if reported immediately, but gradual deterioration itself is usually excluded.
- Ongoing leaks from upstairs units or bathrooms
If water slowly leaks from a shower, bath trap, balcony from an upstairs section, over a long period, the resulting damage is generally not covered.
However, if the damage happened suddenly overnight as a once-off event, that could be treated differently.
- Corroded or decayed pipes
Pipe repairs caused by, corrosion, rust, pinholes i.e. wear and tear, are generally excluded.
A common argument is “But the pipe is inside the wall – how could I maintain it?”
Unfortunately, insurance policies generally exclude wear and tear whether the pipe is visible or not.
- Damp
Typical rising damp or long-term dampness is generally not insured because it develops gradually over time.
- Cracks appearing gradually
Cracks that appear due to settlement, slow movement, structural shifting over time are generally not insured. However, cracks caused by a sudden insured event, such as an earthquake or severe flood, may be covered.
- Tented, cracking or popping tiles
Tiles sometimes suddenly lift or “tent,” often making a loud cracking noise.
Although the event appears sudden, it is generally not caused by an insured peril like storm, flood or fire. This is usually regarded as a maintenance or installation-related issue and is therefore ordinarily not covered.
- Rain entering through poorly maintained windows
If rain enters because windows were not properly waterproofed or maintained, the root cause is usually considered lack of maintenance, not the rain itself.
As a result, such claims are often, rejected.
- Defective workmanship or defective design
Insurance generally does not cover faulty workmanship or defective design. For example, incorrectly installed gutters, poor construction methods
Faulty building work: In these cases, the contractor responsible may need to be pursued instead.
9. Owners’ contents
The body corporate policy generally does not insure owners’ personal belongings.
If water damages your furniture, electronics or clothing, those items would usually need to be claimed from your own contents insurer.
10. Damage to owners’ vehicles
A common misunderstanding arises when a carport collapses during a storm.
Even if the carport belongs to the body corporate, the owner’s vehicle would usually need to be claimed from the owner’s own motor insurer, provided the body corporate was not negligent.
11. Tree root damage
Damage caused gradually by tree roots is generally regarded as a maintenance-related issue and is usually not insured.
12. Leaning walls and retaining walls
Leaning walls that deteriorate over time are generally not covered unless caused by a sudden insured event.
Retaining walls are also often excluded unless specifically included by the policy.
Final thoughts
The most important thing owners should understand is this:
Insurance is designed primarily for sudden and unforeseen events, not ongoing maintenance, wear and tear, gradual deterioration, or defective workmanship.
Of course, every insurer and every policy differs, and there are always exceptions, extensions and endorsements that may apply.
This article therefore provides a general practical overview only and should not replace advice specific to your own policy wording.
Author: Mike Addison
Addsure is a leading sectional title insurance broker. Get fit and proper advice from advisors who understand sectional title.