Author: Aiesha Isaacs
The Sectional Title Act stipulates that the owner in a sectional title scheme is responsible for all excess payments on insurance claims. Such owners incorrectly believe that because the body corporate insures the common property it must pay any insurance excess. The body corporate will in certain special cases take responsibility for excess payments on insurance claims where a special resolution thereof has been passed.
The insertion of Prescribed Management Rule 29 (4) makes it clear that the sectional title owner who lodges a claim is the one responsible for the excess payment in relation to that claim, unless the body corporate passes a special resolution to the contrary.
The trustees, according to Prescribed Management Rule 29 (1) are required to take reasonable steps to insure the buildings as well as all improvements to the common property to the full replacement value. Excess amounts, premiums, cover, and insurance rates must also be negotiated on behalf of the body corporate.
In order to reduce the overall insurance premiums and claims, insurance companies often negotiate a higher excess amount for claims such as burst geysers – which are the most common insurance claims.
If you are concerned that your development’s coverage is inadequate, you should bring it to the attention of the Body Corporate immediately. Most insurance companies have call centres set up to deal with more common claims and if they are contacted quickly and are allowed to send one of their preferred suppliers to handle the work, no excess or a considerably reduced excess, will usually be payable. Quick action by the owner can save unnecessary damage to the unit.