Real Estate Investor Magazine South Africa October 2015 | Page 54

INSURANCE

Sectional
Title Trusts
Staying on top of policies
and procedures

A

trusteeship can often be an overwhelming
acquisition for first time trustees, with a
multitude of new policies and procedures to
organize and access. Ensure that the correct procedures
are being followed with these helpful tips
Check the building policy
Ensure that you have a copy of both the policy wording
and schedule. Make a list of the following points to
double check
• Is the sum insured as you have been advised?
• Is the policy a specific sectional title policy?
• Does the policy provide for burst pipes and burst
geysers?
• Has trustee indemnity cover been included? This
is either a separate section or an extension of
liability cover.
• How much fidelity cover is provided?
Check fidelity cover requirements
Check if there has been a body corporate decision on
the amount of fidelity cover required, if any. This is the
most over-looked insurance aspect and something that
should be dealt with immediately. Trustees are required
to ensure that the owners make a decision on the
amount of fidelity cover required.
Excess arrangements
Take a look at the body corporate rules in respect
of excess, i.e. who pays the excess under which
circumstances. Make sure that brokers and insurers
structure excesses in a way that accommodates this
rule. Excesses “per unit per claim” are not advisable.
Make sure your policy reflects excesses “per event”
so that apportionment of excesses in multiple claim
scenarios does not become over-complicated.
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OCTOBER 2015 SA Real Estate Investor

Request a claims history
Obtaining a claims history report from the insurer
will reveal the true history. Are the trustees aware of
each and every claim submitted? Check the trend and
ratios, and have the insurance advisor provide thorough
explanations on the claims history.
Take all reasonable precautions around common
Ensure that a consultation with a safety expert has
organized to audit the common property for fire and
safety requirements. The inspection can cover safety
standards in respect of national building regulations
being met, e.g. handrails are where they should be,
braai area chimneys are up to standard, swimming
pools properly enclosed, etc

Obtaining a claims history
report from the insurer will
reveal the true history.
Have all owners concur with the sum incurred
Ensure that all owners have a copy of the latest
schedule of replacement values and that the owner’s
acceptance of the schedule of replacement values has
been recorded at a general meeting. The rights to
increase the amount of insurance for units where large
alterations or improvements have been undertaken
should be made clear to the owners of the property.

RESOURCES
www.addsure.co.za
www.reimag.co.za