What owners should know about sectional title insurance

It is important to understand the extent of coverage of the body corporate’s sectional title insurance – and what your personal liability is – to avoid any oversights. This is especially true for new owners.

In this article, we provide some information to clarity the matter:

Sectional title insurance is a legal requirement, and the costs are calculated according to each section owner’s participation quota (PQ) which is factored into the monthly levies and paid by the body corporate (to the insurer). Body corporate insurance is renewed and updated annually. All owners should be advised of their right to increase the amount of insurance for their sections where substantial improvements have been made at the annual general meeting AGM).

Sectional title insurance should cover all residential sections and common property for its full replacement value in the event of fire, flooding, earthquakes, burst pipes, rioting. Should an owner wish to increase the replacement value of his section, the additional cost must be paid by the unit owner in addition to their normal PQ.

Owners should be aware that sectional title insurance only covers the ‘immovable’ sections of residential sections and common property, and excludes movable contents i.e., furniture and décor pieces, which must be insured under the unit owner’s personal insurance.

All owners should request a copy of the latest schedule of replacement values and the owners’ acceptance of the schedule of replacement values are noted in the AGM minutes.

Owners should be informed of the claims procedure so they may know what to do in the case of an insured event, i.e., flood, burst pipe or burst geyser. Some sectional title insurers have 24-hour call centres for emergencies for when things go wrong after hours. The details can be found in the body corporate’s policy document.

Sometimes, owners are not aware that the standard rule (defined in the Prescribed Management Rule 29 (4) in the Sectional Titles Act) stipulates that the section owner who is claiming from insurance it the party who must pay the excess.

*It is important that owners familiarise themselves with the body corporate’s insurance policy or to contact the trustees or managing agent if they require an explanation on any issues relating to the insurance policy.