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What's covered

Buildings insurance - what's covered

Buildings insurance covers permanent structures at the specified risk address that are built, constructed or installed on the property owned by the community scheme or for which the insured is legally responsible.

This includes:

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  • Buildings and outbuildings that are -

- constructed of brick, stone, concrete or metal on metal framework;

- roofed with tile, concrete, slate, metal or any other material specified in the policy schedule;​

  • Fixtures and fittings as specified in the policy schedule (examples include fitted carpets, lifts and their associated equipment, transformers, motors, boilers, air conditioning, standby generators etc.);

  • Walls, gates, posts, fences etc.;

  • Sporting and recreational structures (examples include swimming pools, tennis courts etc.);

  • Saunas, spa baths, jacuzzis;

  • Water pumps, pool machinery, borehole motors;

  • Roads, driveways, parking areas, paths or patios built with brick, tar, concrete or paving.

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What's not coverd

What's NOT covered

Typically excluded from buildings insurance cover are -

  • Gardens and landscaping, including trees, hedges, plants, lawns, rocks, pebbles, soil, sand etc.;

  • Dam walls, marinas, wharves, docks, jetties, pontoons etc.;

  • Above-ground portable swimming pool;

  • Mobile air conditioning units;

  • Tenants' property, fixtures and fittings;

  • Unfixed, moveable floor coverings, curtains and internal window coverings;

  • New buildings under construction.

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Thatch & wooden structures

Thatch and wooden structures are not automatically covered and must be specified on the policy schedule.

Cover for fire perils is subject to compliance with fire safety and other risk mitigation requirements.

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How to determine the correct sum insured for your complex

The body corporate must obtain a replacement valuation at least every 3 years to determine an adequate sum insured, i.e. avoiding both under- and over-insurance.

It is prudent to appoint a duly qualified professional valuer with a proven track record in sectional titles insurance.

Professional Indemnity cover held by the valuer serves to protect the body corporate and its trustees in the event of an erroneous valuation.

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(Click here to learn about the perils of appointing an unqualified valuation provider .)

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Insured perils

​Buildings insurance provides cover against sudden and unforeseen damage to buildings and common property improvements caused by the following perils:

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  • Lightning, explosion and smoke

  • Riot, civil commotion, strikes, lock-outs, labour disturbances or malicious

  • Persons acting on behalf of or in connection with any political organisation

  • Storm, tempest, windstorm, hail and flood

  • Earthquake and subsidence

  • Water escape, including bursting or overflowing of water tanks, apparatus or pipes

  • Impact by aircraft and vehicles

  • Housebreaking or any attempt thereat

  • Accidental damage

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Events not covered

Insurers generally don't cover loss and damage incurred gradually over time or by wear and tear.

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When is "average" applied?

Insurers reserve the right to apply the "average" clause when a post-loss assessment determines that the buildings and other improvements are under-insured.  

In applying average, the insurer will pay out the claim amount less excess and less the percentage of under-insurance.

Under-insurance is avoided and trustee liability delegated by appointing a suitably qualified professional valuer to assess the estimated new replacement cost.

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What the law says about Buildings insurance

In terms of the Sectional Titles Schemes Management (STSM) Act, a body corporate must -

  • 3(1)(h) insure the building(s) and keep them insured to the replacement value thereof against fire and such other risks as may be prescribed;

  • 3(1)(i) insure against such other risks as the owners may by special resolution determine; and

  • 14(1) an owner may obtain an insurance policy in respect of any damage to his or her section arising from risks not covered by the policy effected by the body corporate.

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STSM Regulation 3 further states that other risks against which a body corporate may insure are -

  • (a) lightning, explosion and smoke;

  • (b) riot, civil commotion, strikes, lock-outs, labour disturbances or malicious

  • (c) persons acting on behalf of or in connection with any political organisation;

  • (d) storm, tempest, windstorm, hail and flood;

  • (e) earthquake and subsidence;

  • (f) water escape, including bursting or overflowing of water tanks, apparatus or pipes;

  • (g) impact by aircraft and vehicles; and

  • (h) housebreaking or any attempt thereat.

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STSM Regulation 23 states that -

  • (1) The insurance policies of the body corporate in terms of sections 3(1)(h) and (i) of the Act—

    • (a) must provide cover against—

      • (i) risks referred to in regulation 3;

      • (ii) risks that members resolve must be covered by insurance; and

      • (iii) risks that holders of registered first mortgage bonds over not less than 25 per cent in number of the primary sections by written notice to the body corporate may require to be covered by insurance;

    • (b) must specify a replacement value for each unit and exclusive use area, excluding the member's interest in the land included in the scheme; provided that any member may at any time by written notice to the body corporate require that the replacement value specified for that member's unit or exclusive use area be increased;

    • (c) must restrict the application of any "average" clause to individual units and exclusive use areas, so that no such clause applies to the buildings as a whole;

    • (d) must include a clause in terms of which the policy is valid and enforceable by any holder of a registered mortgage bond over a section or exclusive use area against the insurer notwithstanding any circumstances whatsoever which would otherwise entitle the insurer to refuse to make payment of the amount insured, unless and until the insurer terminates the insurance on at least 30 days' notice to the bondholder; and

    • (e) may include provision for "excess" amounts.

  • (2) A member is responsible—

    • (a) for payment of any additional premium payable on account of an increase in the replacement value referred to in sub-rule (1)(b);

    • (b) for any excess amount that relates to damage to any part of the buildings that member is obliged to repair and maintain in terms of the Act or these rules, and must furnish the body corporate with written proof from the insurer of payment of that amount within seven days of written request.

  • (3) A body corporate must obtain a replacement valuation of all buildings and improvements that it must insure at least every three years and present such replacement valuation to the annual general meeting.

  • (4) A body corporate must prepare for each annual general meeting schedules showing estimates of—

    • (a) the replacement value of the buildings and all improvements to the common property; and

    • (b) the replacement value of each unit, excluding the member's interest in the land included in the scheme, the total of such values of all units being equal to the value referred to in sub-rule 4(a).

 

According to STSM Regulations, section 31(1), a member must maintain, repair and, when necessary, replace (a water-heating) installation which serves that member's section or exclusive use area.​​

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