Quick answer: Replacement values are central to sectional title insurance. Trustees need to ensure the buildings and sections are insured for appropriate replacement value, not market value, and that owners understand the schedule before renewal or AGM approval.
Replacement value vs market value
- Replacement value generally relates to the cost to rebuild or reinstate insured property.
- Market value is what a property may sell for.
- A sectional title insurance review should focus on rebuild cost, professional fees, demolition, escalation and policy limits.
Why AGM approval matters
- Owners need visibility on insured values and insurance decisions.
- The schedule of replacement values helps owners understand the insured allocation for sections.
- Incorrect or outdated values can lead to underinsurance problems.
Trustee checklist before the AGM
- Obtain or review a professional replacement valuation where appropriate.
- Check the policy schedule and sums insured.
- Identify special features, improvements or non-standard construction.
- Prepare clear insurance information for owners.
- Record resolutions and trustee decisions properly.
Common mistakes
- Using purchase price or municipal value as the insured value.
- Not updating values after improvements or extensions.
- Ignoring escalation, demolition or professional fees.
- Failing to communicate the schedule clearly to owners.
Need help reviewing the insurance position?
Lowensvlei Insurance Brokers assists body corporates, trustees and managing agents across the Western Cape with body corporate insurance reviews, renewal checks, water damage claims, public liability, fidelity cover and trustee insurance support. Request an insurance review.
Lowensvlei Insurance Brokers assists body corporates, trustees and managing agents across the Western Cape with body corporate insurance reviews, renewal checks, water damage claims, public liability, fidelity cover and trustee insurance support. Request an insurance review.
This guide is general information for trustees, owners and managing agents. It is not legal advice. Always check the scheme rules, policy wording and current legislation before making final decisions.