The sectional title claims process is often misunderstood which can lead to conflict and unpleasantness. Understanding the process certainly goes a long way towards managing the expectations of trustees and owners.
Sectional title legislation is designed in a way that the trustees arrange and deal with the insurance as the owner have certain rights and interests in the policy.
The trustees must insure the buildings for its full replacement value plus some other risks. They also need to negotiate the premium, excess and rate on behalf of the body corporate which can only be negotiated properly (usually annually) where trustees have an understanding of claims ratio.
Prescribed Management Rules also spell out that no document signed on behalf of a body corporate is valid or binding unless signed by two trustees or one trustee and the managing agent.
Other than geyser call centers, we do not recommend that owners use centers to submit sectional title claims as it tends to cut out the managing agent and trustees. Without involving them, they will not be in the best position to renegotiate the policy effectively upon renewal as they would be unaware of the exact claims history. Therefore, when owners submit claims directly to call centers, due process is bypassed, creating an opportunity for fraudulent claims.
If the owner uses a broker to submit their claim, the claim will be properly assessed, the correct procedure will be followed and the forms will be completed correctly. This guidance will help to avoid a repudiated claim – often due to claim forms completed incorrect – and provide the owner with the best chance to have their claim paid out in full.
While call centers have their advantages – such as fast reporting, mitigation of further losses in some cases, paperless and easy claims – it is important to remember that in the case of a community scheme’s insurance policy, the body corporate is the insured and not the individual owner. This means that, while owners have a right to claim, they need to channel their claims via the body corporate and specifically, through the trustees who are responsible for insuring the body corporate.
We support geyser call centers because owners are responsible for geyser maintenance which also enable owners to attend to geyser claims immediately.
The owner who are submitting the claim should complete the claim form and give it to the trustees or managing agent, along with proof of the claim such as quotes, invoices or a report in support of the claim. The claim must then be validated with a signature from the responsible trustees before being submitted to the insurer, usually via the broker. Generally, insurance policies required that claims must be submitted within 30 days of a claimable event taking place.
Provided that all proof of claim is correctly collated and the claim form properly completed and signed, the process for simpler claims can be quite quick, often within 48 hours.
Larger or more complex claims require the appointment of a loss adjuster which means the claim will take a bit longer to finalise as contractors may need to verify quotes, resubmit specifications, etc. after which the loss adjuster prepares a report for the insurer.
Once finalised, the insurer either pays the claim, pay an adjusted claim sum or rejects the claim.
As the body corporate is deemed the insured, any claim dispute from the owner needs to be taken up by the body corporate on that owner’s behalf. The trustees need to manage this process in the interests of all owners, whereas the owner must be aware of their rights and the procedure to be followed to resolve a claim dispute. A good broker will be able to informally mediate and assist with this process. It may be a good idea for bodies corporate to set up a claims procedure to suit their needs and communicate this to owners so they are clear on how to deal with a claimable event.
Claimable vs non-claimable events:
Damage to the building that occurred suddenly, that was unforeseen and directly as a result of the events listed below may typically be claimable:
>Fire, lightning, explosion
>Wind, hail, storm, snow
>Burst pipe (not as a result of wear and tear)Burst hot water cylinder
>Impact such as a car colliding with gate or wall
>Accidental damage, e.g. spillage of paint on carpets
>Flood or sudden water damage
>Damage as a result of break-in
Damage or losses as a result of wear and tear, ageing, maintenance related, occurring over a period of time would ordinarily not be covered. Typically, the following common losses are not ordinarily covered:Water penetration that took place over time as a result of failing waterproofing
>Water damage occurring during rains due to leaking balcony from flat above
>Damage to ceilings over time due to bath trap or shower above leaking
>Damage to pipes that are old, rusty and leaking due to pinholes.
>Cracks appearing in tiles and walls unrelated to any specific claimable event
>Seeping of water, dampness or mould as a result of leaking pipe or pipe with pinholes
>Rain damage due to window sill not waterproofed properly
>Damage resulting from poor workmanship
>Damage to a car after wind causes a roof tile to be lifted and fall on car
>Damage to an owner’s contents following a storm, fire, etc.
>Damage caused by tree roots growing into pipes over time
>Parts of the building may not be covered, or fall within the definition of buildings, such as thatch, canvass awning, signage, certain glass fronts, retaining walls, garden features, wooden decks and balustrades, etc.
Note that theft from the buildings, i.e. theft of copper pipe, gate motors, cameras, air conditioner parts, etc is also not be covered as a default. Trustees and owners need to inquire as to what may or may not be covered against theft.
Third parties and liability cover
Remember that the policy is there to protect the body corporate and not any third parties or tenants. Where an owner or tenant suffers damage to their assets, the sectional title policy will not respond unless they can find a reason to hold the body corporate legally liable. The policy is there mainly to provide cover for the body corporate’s buildings.
The body corporate also needs liability cover to protect them against any third-party claims for damages.
Author: Mike Addison
Addsure is South Africa’s leading sectional title insurance brokerage. Obtain fit and proper advice from advisors who understand sectional title. Contact our head office, Cape Town (021) 551 5069 who will put you directly in touch with one of our nationwide advisors.