Who should arrange additional cover for sectional title schemes?

[Updated: 18 June 2025]

The question of who should arrange additional insurance cover in a sectional title scheme is not always straightforward. Between the Sectional Title Schemes Management Act (STSMA), its regulations and prescribed management rules, and CSOS Regulation 15, there are several aspects to consider, including the 1-2-3 of sectional title, i.e. buildings, liability, and fidelity cover.

Let’s unpack the framework and clarify responsibilities, especially where “additional cover” and “additional sums insured” often confuse.

Buildings cover: Understanding what’s covered and what can be added

Prescribed cover – According to STSMA Section 3(1)(h), the body corporate needs to insure buildings against fire and other prescribed risks. These are outlined in Regulation 3.

Additional building cover – STSMA Section 3(1)(i) goes further. Owners may agree (by special resolution) to insure against other risks not already prescribed. This is reinforced in Prescribed Management Rule (PMR) 23(8), which places this item on the AGM agenda. However, a special resolution is required to implement it.

This makes the process for arranging extra building cover quite rigid. For example, if the body corporate acquires a vehicle, a special resolution is needed before it can be insured.

Covering geysers for wear and tear could arguably also require a special resolution or even a rule change under PMR 31, which deals with the maintenance and replacement of geysers.

This rigidity can expose the scheme to risk if decisions are delayed.

The owner’s right to insure separately

STSMA Section 14 allows an individual owner to take out their insurance for their section, covering risks not included in the scheme’s policy. This is commonly referred to as dual insurance.

Additional cover vs. additional sums insured: What’s the difference?

These two terms are often confused but are quite distinct:

Additional cover refers to expanding the scope of risks covered by the policy (e.g., including geyser maintenance or insuring a motor vehicle). It usually requires a special resolution by the body corporate.

Additional sums insured refer to increasing the insured value (replacement value) of a specific owner’s section. This is addressed in PMR 23(1)(b) and does not require a special resolution, but it does require a request and premium payment by the individual owner.

How to request additional sums insured

An owner may request that their section be insured for a higher replacement value. The process is simple:

• The owner writes to the trustees requesting the increase.
• The trustees instruct the broker or insurer.
• The schedule of replacement values is updated.
• The policy is endorsed.
• The additional premium is charged to the requesting owner.

What about exclusive use areas (EUAs)?

Improvements to EUAs must also be insured. Although EUAs are considered common property, they can still be added to the policy. The additional cost may be:

• Recovered as part of the EUA levy, or
• Treated similarly to additional sums insured and charged directly to the benefiting owner.

It can be argued that this isn’t really “additional cover” in the technical sense, but rather that it’s just ensuring all improvements are included in the policy.

Liability cover

The STSMA and insurer norms require a minimum of R10 million liability cover. However, this may not always be sufficient, particularly in schemes with leisure, commercial, or public exposure.

AGMs should ratify or increase the amount of liability cover as appropriate. It is now common to see schemes holding R50 to R100 million in liability cover.

Fidelity cover

CSOS Regulation 15(3) outlines the minimum fidelity cover requirements. While the minimum is calculated based on a formula, PMR 23(7) requires that it be tabled at the AGM.

Importantly, the AGM doesn’t technically approve the minimum amount but rather either:

• Accepts that the minimum is sufficient, or
• Resolves to arrange additional fidelity cover if it’s deemed necessary.

The STSMA and CSOSA legislation aim to protect schemes and owners through adequate insurance cover. However, it’s important to understand:

• Who is responsible for arranging what;
• What requires a special resolution;
• And how owners can take responsibility for their own needs.

Understanding the difference between additional cover and additional sums insured is critical to navigating insurance in a sectional title environment.