MAIN IMAGE: Pearl Scheltema, CEO of Fitzanne Estates
Staff writer
The South African news cycle is fast, and while most of us have already moved on from the news that floods ravaged large parts of Kwa-Zulu Natal on 13 April, many property owners are still in the throes of securing compensation from insurers in the wake of large-scale property destruction as a result thereof.
According to major insurance agencies the amount of claims that have been lodged due to flood damage in this region is ‘staggering’, running into hundreds of millions of rand.
When something like this happens, it often comes as a wake-up call for property owners – especially Sectional Title owners, whose insurance situation is somewhat more complex than that of a standalone home- or property owner.
“Sectional Title insurance can be a little confusing and, as a new owner, you may be tempted to just assume your body corporate has you covered. While this may be the case, understanding the extent of your coverage and your personal liability is the only guaranteed way to protect yourself against potentially costly oversights,” says Pearl Scheltema, CEO of Fitzanne Estates.
Here are five Sectional Title insurance realities that have been highlighted by the recent floods in KZN:
Factor insurance into levies
According to the guidelines set out in the Sectional Titles Schemes Management Act 8 of 2011, Sectional Title insurance is a legal requirement for all developments. Typically, the costs are shared between section owners and form a non-negotiable part of your monthly levy on your unit. The overall insurance premium is then paid to the insurance provider by the body corporate, who takes it from the pooled funds.
The amount each section owner paid is normally based on the participation quota (PQ) associated with each unit in the scheme. However, in certain instances owners, or their bond provider, could request additional cover.
Flood insurance
The body corporate should provide a copy of the insurance policy. The norm is that insurance of this nature should cover the owners as a collective for the full replacement value of all or any of the residential sections in the complex. This includes damage because of fire, flood, earthquake, riots, burst pipes, and vehicle collisions.
Items not covered
Sectional Title insurance typically will not cover day-to-day wear and tear, or any damages that had occurred over a long period of time due to poor design or construction. It also will not cover home contents or personal belongings – even if these losses occur in the process of an insured event (such as a flood, for instance). Sectional Title owners need individual insurance policies to cover items like these.
Excess paid by claim lodger
According to the recent insertion of Prescribed Management Rule 29(4) in the Sectional Titles Act, the section owner who lodges a claim is the one responsible for the excess payment relating to that claim. The only way around this is to convince the Body Corporate to pass a special resolution.
Support property manager
As the owner of a unit in a Sectional Title scheme, all the information coming your way regarding insurance and legal matters can be quite overwhelming. This is where the support of a seasoned property manager, or team of property managers, comes in handy.
“Property managers that specialise in sectional titles are immersed in the legal aspects of this specialised area of the property sector every day, and can advise you regarding your rights and obligations, and assist you in fulfilling them efficiently. This also goes in times of crisis, such as many property owners had to weather in Kwa-Zulu Natal during the recent floods,” Scheltema explains.
