What recourse do you have when your claim is rejected?

[Updated: 29 July 2025]

Let’s be trustees who deal with disputed claims fairly and correctly!

Claims are either common area claims or otherwise claims that deal with the owners’ sections. This is where things often get tricky for various reasons, such as owners taking advantage or being demanding, trustees overreaching, incorrect understanding of the STSMA and so on.

Disputes between owners and trustees over insurance claims can be sensitive. While trustees must act in the best interests of the body corporate, it’s equally important to acknowledge an owner’s right to question an outcome they believe is unfair.

This article offers a step-by-step guide to managing such situations, with fairness, proper process, and compliance with legal requirements.

Step 1: Understand who the insured is

In a community scheme, the body corporate is the insured party, not the individual owners. Trustees are responsible for submitting, managing, and responding to insurance claims on behalf of the scheme.

If the insurer rejects a claim and the trustees agree with the rejection, they are entitled to accept the outcome. The individual owner, technically, cannot override this decision. In such cases, the dispute will then fall between the owner and the body corporate, not the owner and the insurer. However, we suggest a particular approach in step 2 below.

Step 2: Allow the owner a fair opportunity to lodge a complaint

If an owner feels strongly that the claim was unfairly rejected, trustees should consider allowing the owner to lodge a complaint via the National Financial Ombud (NFO).

Even if the trustees disagree with the owner’s view, offering this option:

• Promotes transparency
• Reduces tension
• Respects the owner’s right to seek recourse

The trustees can provide the owner with:

• Guidance on the process
• A chance to draft the complaint

Clarification that the body corporate must submit the complaint, not the owner directly. There is also a way of dealing with this – Seek guidance from your insurance advisor.

Step 3: Use the NFO juristic person online complaint form (with caution)

While the NFO offers online complaint forms, there is no specific form or process tailored to bodies corporate.

We recommend the following workaround:

• Draft a separate formal complaint letter in the name of the body corporate, referencing the dispute and including both the owner’s and trustees’ viewpoints. Addsure now provides clients with an online complaints generator.
• Use the “juristic person” online form provided on the NFO website
• Upload the signed complaint letter (and supporting documentation) as part of the submission

This approach ensures compliance with both the legal structure of sectional title insurance and the NFO’s current submission process.

Step 4: Ensure proper authorisation and sign-off (per PMR 10)

Any complaint submitted on behalf of a body corporate must be properly authorised in terms of Prescribed Management Rule (PMR) 10, which requires the signature of:

• Two trustees, or
• One trustee and the managing agent

This applies to both the original claim form and any complaint submitted to the NFO. These documents are treated as legal instruments, and any court or ombud office should reject them if not properly signed. (not locus standi).

Step 5: Submit with transparency and balance

If the trustees do not support the owner’s complaint but agree to submit it, it’s advisable to attach a brief cover letter from the trustees outlining:

• Their view of the matter
• Their reasons for disagreeing with the complaint
• Their willingness to support the owner’s right to escalate

This balanced approach allows the NFO to fairly assess the situation while preserving the trustees’ position.

Step 6: Involve the insurance advisor

The schemes’ trusted insurance advisor should help navigate the issue. The insurance advisor (broker) certainly should not complete the forms; however, they can provide an opinion as to whether the insurer was fair with their decision in the first place. If the advisor feels that the insurer has erred or is being unfair, they should help negotiate a fairer settlement. Likewise, where the insurer’s decision seems correct to the advisor, the advisor should coach the claimant accordingly. It’s not about “fighting for an outcome” but rather ensuring that the fairest and correct outcome is achieved.

At Addsure, we frequently assist clients by:

• Reviewing claim rejections
• Providing context and policy insight
• Supporting trustees and owners with Ombud submissions when appropriate

This guidance can offer clarity, reassurance, and direction for all parties involved.

Final thought

Disputed claims are never easy, but a fair and process-driven approach can make all the difference. By balancing the rights of the owner with the duties of the trustees, and by following the correct procedures, you can ensure that even difficult outcomes are handled with professionalism and respect.