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New sectional title insurance guidelines explained

New sectional title insurance guidelines explained

Author: Pranil Maharaj
Date: 2017-04-28

Each year the trustees of sectional title schemes should be re-assessing the insurance taken out for their schemes, which is usually tabled at the annual general meeting as an agenda item, as per the Sectional Title Schemes Management Act (STSMA) (Section 17 (7)(j).

Insurance cover is a requirement by law, and is dealt with in great detail in the STSMA section 23, stipulating in the sub-rules what needs to be insured - including the buildings, public liability, fidelity cover, and South African Special Risks Insurance Association insurance (SASRIA). In addition, it stipulates how to deal with excesses payable.

The rules also stipulate that the insurance must cover the full replacement value of all units, and that the replacement value of each unit value must be specified separately.

It's important that the insured value ties up with the sectional plans, value of the units and the participation quota of the units. The participation quota might vary from unit to unit (because of their sizes), so this must be checked thoroughly.

Owners should check that their units are insured for the correct replacement amounts, particularly if they have renovated or added value in some way to their unit, as the extra value might not be covered.

Dealing with the insuring of a sectional title scheme may seem onerous or complicated, but if done properly, need only be updated every couple of years to keep in line with the market.