Tarleys Trust
0 comments 22.01.2016
We know that unforeseen events can cause a large amount of stress on you as a property owner. Luckily, insurances are in place to help alleviate the stresses caused by these situations. In this information pack, we will look specifically at Sectional Title property insurances.
Generally speaking, there are 2 types of insurances a homeowner in a Sectional Title complex will have. The first is the insurance you, as an owner, have in respect of your particular flat. The second is the insurance the Body Corporate has in respect of the building.
The individual units insurance is usually based on the requirements of the institution which has an endorsement over the property, usually the bondholder (if applicable) and is taken out either through the bond issuer or an independent insurance company or broker.
The Body Corporate’s insurance is based on the replacement value of the entire building less the cost of the land. In other words, the total it would cost to rebuild the complex should it be destroyed. Certain other items are covered in this type of insurance as well.
Understanding these types of insurances and their application is fundamental to being a property owner and will allow educated decisions and the correct action being taken in a given set of circumstances.
Before delving into the different applications of the different types of insurances, there are a few general rules that apply to both types of insurances:
Insurance will never pay for the cause of the damage only the resultant damage;
- Insurers and underwriters often have specific contractors that must quote on insurance related repairs;
- Insurance will not cover any damage caused as a result of a failure to maintain any item;
- Insurance will not pay for replacing any item which can be saved or repaired;
- Insurers will not accept an incomplete claim form;
- The cause of the damage must be repaired and proof thereof is often required;
- Neither of the above mentioned insurances cover the contents of any property, this will only be covered in a policy specific to your contents
When the Body Corporates insurance is appropriate in a set of circumstances, the Owner will always be responsible for the excess. There are no exceptions to this rule.
In order to determine which of the two types of insurances are applicable in a set of circumstances, one need first assess the situation. If the cause of the problem is completely inside your unit, your individual property insurance will cover the resultant damage. If, however, the cause of the problem is related to an external source (which usually includes your geyser), the Body Corporate’s insurance may cover the damage.
When any event occurs which is subject to an insurance claim, the first action one would need to take is to limit the damage as far as possible. For example, if a pipe bursts, the Owner must take all necessary and appropriate steps to stop the flow of water. Thereafter, the resultant damage can be assessed.
Insurers will only appoint an assessor when they feel it is necessary and therefore none of the damaged items should be discarded before this determination has been made.
In order to ascertain the appropriate insurance, we illustrate through a simple diagram below. In this diagram, we depict a 1 bedroom flat with a main en-suite and a guest bathroom.
Key:
Double Lines ( = ) : External brick walls
Single Line ( - ) : Internal brick walls
If the problem were to occur on an external wall ( = ) the issue would usually be covered by the Body Corporates insurance.
If the problem were to occur anywhere within the section but not on the double lines ( = ), this would not be covered by the Body Corporate’s insurance.
If the problem were to occur within or on the single lines ( - ), the problem would also not be covered by the Body Corporates insurance.
To expand matters further, should the problem be coming from the slab above or below the Section or the roof above the Section, this is also for the Body Corporates insurance (provided it is not due to any neglect of maintenance).
If a plumbing problem is being experienced which falls under the Body Corporate’s insurance, the resultant damage should be covered by the Body Corporates insurance. This, however, is a very tricky area, as often the cause of the problem defines what is or isn’t covered. Each claim needs to be assessed individually to determine this. Your first steps would be to get the water flow stopped, the problem isolated and repaired and the floor area dried. Once again, we need to use the insurance recommended contractors to attend to these problems and all reports and invoices need to be handed in to our offices to submit with the claim. All other resultant damage will be assessed once you have completed the above steps.
If there has been a break-in or attempted break-in, the matter needs to be reported to the police and a copy of the claim number needs to be handed in to our offices to submit with the claim form. Again, all reports and invoices need to be handed to us as well.
When an insurance claim is completed, we will need to complete a claim form. An example of a claim form is below:
Once all information pertaining to the claim has been completed, this will be forwarded to the insurance brokers who will then either appoint an assessor, or pay the claim on the strength of the supporting documentation.
Should the problem fall within the definition of the Body Corporate’s insurance but the claim not be paid for any reason, this does not automatically confer liability upon the Body Corporate.
Important Steps to Follow:
1) Take all necessary steps to reduce damages
2) Assess which insurance the problem falls under
3) Inform the appropriate insurance company in order for them to log the date of the event
4) Attend to the cause of the damage
5) Obtain quotes for repair of the resultant damage (do not discard any damaged goods)
6) Submit all quotations and all necessary information to complete the claim form to us in order for a claim form to be completed and submitted
and simple ways to boost property values – something that in today’s tough property market goes a very long way indeed. How does renovation help exactly however, and is it worth the cost of endless building, fixing and remodelling? Here are three of the biggest reasons to consider the benefits of renovating your property: