What owners needs to know about their geyser claims

(Updated: 22 July 2024)

This blog post provides guidance on how a geyser claim should be dealt with and what you could expect from your insurer. This information mostly does not apply to call centre claims.

Strictly speaking, bodies corporate should not insure against geyser maintenance or the replacement of worn-out geysers by default.

Prescribed Management Rule 31 of the Sectional Titles Scheme Management Act 8 of 2011 (Regulations) states:

“Notwithstanding that the water-heating installation forms part of the common property and is insured by the body corporate, a member must maintain, repair, and, when necessary, replace such an installation that serves that member’s section or exclusive use area; provided that where such an installation serves sections owned or exclusive use areas held by more than one member, the members concerned must share the maintenance, repair and replacement costs on a pro-rata basis”.

This makes it clear that while geysers are insured for normal perils, such as fire, storm, impact, etc., the full cost of wear and tear, including the need for a new geyser, is borne by the owner (member). The way we usually do is not in in line with current default regulations and understanding this provides context to the issue when owners complain about excess payments or amounts exceeding the policy limits.

Over the years, insurers started including a geyser maintenance section with specific conditions and policy wording, mainly due to market expectations and demand. This has allowed insurers to provide clearer and more comprehensive benefits as well as being able to manage geyser risks more proactively.

Each insurer will have their own definition of a geyser and list of events they will or will not cover.

Bear in mind that the common interpretation of what a typical electric hot water system comprises, according to sectional title legislation, usually differs from the policy definition and the extent to which the insurer considers it to be part of the geyser.

What is considered to be the hot water installation?

Over the years, most sectional title experts have considered the start of the hot water installation to be where the cold water enters the geyser, i.e., the inlet and drain cock is where the hot water installation begins.

They also believe that it ends where the hot water exits into the basin, bath, shower i.e., the spout or hot water tap.

The insurers, on the other hand, set out what they will cover. Typically, this includes the geyser tank with its internal components and excludes the sacrificial anode plus elements and pipes within one metre of the geyser. The isolator switch, circuit breaker, ripple relay, and Pressure Relief Valve (PRV), are typically excluded from cover.

Some insurers will provide additional cover at an additional cost (extra premium), such as the cost of relocating the geyser, access costs (open the ceiling, inaccessible housing, dismantling, and reinstalling a cupboard or box) but by default, these extra expenses would be for the owner’s account following PMR 31 above.

How will I know what is covered in my case?

Depending on what is stated in the policy wording and schedule will determine the extent of coverage the owner will enjoy. The insurer’s policy limits and excesses will differ from scheme to scheme, depending on the requirements and the claims ratio, which can be amended during a policy year.

At claim stage, the managing agent, estate manager, or insurance broker will provide the applicable limits, excesses, etc., as at the date and time of loss.

Currently, a typical geyser excess for replacement is usually between R2,000 and R3,500 with the limit for a 150-litre geyser replacement between R8,500 and R9,500.  Lower excesses and higher limits can usually be negotiated with a slightly higher premium where trustees are managing the geysers well and where higher spec geysers such as stainless-steel geysers with more extended warranty periods are installed.

For repairs, limits are often between R1,000 and R2,000 with a small excess of R250.

Does the age of the geyser matter?

Geysers under warranty are usually excluded from cover as the manufacturer should cover the cost of a

new geyser where a geyser fails within the warranty period. The cost of such installations would be for the owner’s account.

Some insurers reduce the limits for older geysers, some on a sliding scale.

How do the limits work?

Replacements:

The policy schedule will state the limit of the geyser cover, usually based on the geyser size. After the geyser claim is submitted, the insurer will process the claim up to the limit and less the geyser excess stated in the policy.

Example:

Geyser replacement cost per plumber’s invoice = R11,000

Geyser Limit = R9,500

Geyser Excess = R2,500

The insurer will settle the claim with R7,000.

The owner will pay R4,000 towards the cost of replacing their geyser.

Repairs:

The same principles apply and by example.

Geyser repair cost per plumber’s invoice = R1,850

Geyser Limit = R1,500

Geyser Excess = R250

The insurer will settle the claim with R1,250

The owner will pay R600 towards the cost of repairing their geyser.

Who pays the geyser excess?

In terms of Prescribed Management Rule 23. (2). excess is paid by the owner where the owner is responsible for the maintenance of that part of the building. In terms of PMR 31, the owner must maintain the geyser; therefore, it follows that the owner of the section which is served by the geyser will be required to pay the excess on any such geyser repair or replacement claim.

Arguably, items on common property, which might be included as covered by some insurers, but outside the legal expert interpretation of the hot water installation, would be for the body corporate’s account.  An example is the PRV, which serves the geyser and the household. It is not a part of the geyser by interpretation, but sometimes covered by insurance.

How do I submit my geyser claim form and what should be submitted with the claim?

The insurer will require a signed claim form in terms of their policy or an approved form signed by the insured.

The following information should accompany the claim form:

1. The plumber’s invoice with the following details
   • Description of the parts used and itemised labour.
   • Details, and serial numbers of old geyser.
   • Details and serial numbers of new geyser, including make and model.
2. Before and after photos and photos of the respective geyser tags.
3. Certificate of Compliance (CoC) where required.
4. Detailed quotations or invoices for any resulting damages

The claim should be submitted via your managing agent or trustees so that the claim can be attested.

Can I upgrade my geyser to stainless steel?

Upgrading to stainless steel should be no problem with the insurer as long as you only receive claim settlement for up to the value of the existing geyser.

Once the claim is submitted, the insurer will settle via the body corporate’s bank account. The body corporate should pay the plumbing contractor as soon as possible or reimburse the owner against proof of payment already made by the owner. The body corporate may not make cash in lieu settlements to owners as the body corporate is obliged to apply any insurance money to reinstate damage -section 3.(1)(j)of the Sectional Titles Scheme Management Act refers.

It is essential to remember that geyser claims are generally only valid for a certain period of time, so it is necessary to read your policy carefully and act quickly if you need to make a claim.