08 Jul Insurance pitfalls in sectional title living: What every owner should know

Insurance protects one of your biggest investments, but many sectional title owners and HOA members only think about it when something goes wrong. Understanding how your community scheme’s insurance works can help you avoid costly misunderstandings and ensure you are properly protected.

Know what is covered

In most sectional title schemes, the body corporate is responsible for insuring the buildings and common property. This typically includes roofs, exterior walls, shared facilities, and permanently installed fixtures. However, your personal belongings, such as furniture, electronics and clothing, are not covered by the scheme’s policy. Owners should arrange separate household contents insurance for these items.

Maintenance matters

Insurance is designed to cover sudden and unforeseen events, not poor maintenance. Whether it is a leaking roof, deteriorating waterproofing, some corroded pipes or an ageing geyser, neglect can lead to claims being rejected. Both the body corporate and individual owners have maintenance responsibilities, and keeping the property in good condition is one of the best ways to protect your investment.

Stay adequately insured

Construction costs change over time, making regular replacement valuations essential. If a scheme is underinsured, the payout after a major loss may not be enough to rebuild the property, potentially leaving owners to fund the shortfall through special levies. Trustees should review insurance valuations periodically (every 3 years as per the Act) and ensure the policy remains aligned with current rebuilding costs.

Review your policy annually

Insurance should never be treated as a “set and forget” expense. Policies should be reviewed each year before renewal to ensure they still reflect the needs of the scheme. Building improvements, solar installations, new security measures, or changes to common property may all affect the level of cover required.

Understand your responsibilities

Owners should familiarise themselves with the scheme’s rules regarding insurance claims, excess payments, and maintenance responsibilities. Asking questions before a claim arises can prevent frustration later.

Final thoughts

Good insurance is about more than having a policy in place. By understanding what is covered, maintaining the property properly and reviewing insurance regularly, owners and trustees can reduce risk, avoid unnecessary disputes, and ensure their community scheme remains financially protected for years to come.

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