Sectional title insurance can become complicated because the policy affects the body corporate, trustees, managing agents and individual owners. A renewal should not be approved only because the premium looks acceptable.
Trustees should understand the main insurance risks, the policy structure, the excesses, the sums insured, the claims process and the important exclusions before renewal terms are accepted.
1. Check the building sum insured
The building sum insured is one of the most important parts of the sectional title insurance policy. If the sum insured is too low, the scheme may face underinsurance problems after a large claim.
- Has the body corporate had a recent replacement valuation?
- Does the sum insured include all buildings and common property structures?
- Are walls, gates, paving, outbuildings, pumps, motors and shared infrastructure considered?
- Has inflation or building-cost movement been considered?
- Will the trustees be comfortable explaining the insured value at an AGM?
2. Review geyser and water-damage excesses
Geyser and water-damage claims are among the most common sources of frustration in sectional title schemes. Owners often only discover the excess position after a claim has happened.
- What is the geyser excess?
- Is there a separate excess for resultant water damage?
- Does the policy distinguish between maintenance and sudden damage?
- Who is responsible for the excess in different claim scenarios?
- Are trustees and owners clear on the claim process?
3. Review public liability cover
Public liability cover is important where the body corporate has common property areas such as walkways, stairs, driveways, gates, gardens, parking areas, pools, boundary walls or shared facilities.
- What is the public liability limit?
- Does the limit appear suitable for the size and risk profile of the scheme?
- Are high-risk common property areas properly maintained?
- Are incidents and complaints recorded clearly?
4. Check trustee indemnity cover
Trustees make decisions on behalf of the body corporate. Trustee indemnity cover may assist where trustees face certain claims connected to their official duties, subject to the policy terms and conditions.
- Is trustee indemnity included?
- What is the limit?
- Are there exclusions trustees should understand?
- Does the cover match the responsibilities of the trustees?
5. Check fidelity cover
Fidelity cover is important because body corporates handle scheme funds. Trustees should understand how the policy deals with fraud or dishonesty involving scheme money.
- Is fidelity cover included?
- What limit applies?
- Who is covered under the wording?
- Are managing agent controls and banking processes clearly documented?
- Are there conditions around audits, dual authorisation or financial controls?
6. Review common property and shared assets
Not all schemes are the same. Some have gates, electric fencing, pumps, boreholes, water systems, solar equipment, lifts, intercoms, boundary walls or other shared assets that need to be considered.
- Are shared assets shown correctly on the schedule?
- Are gate motors, pumps and electrical items included where needed?
- Are there limits for machinery breakdown or electronic equipment?
- Are exclusions or maintenance conditions clear?
7. Look at the claims history
A claims history can show patterns. Repeated geyser claims, storm damage, water leaks or electrical losses may point to maintenance issues, unclear rules or a need to review excesses.
- Which claims happened in the last 12 to 36 months?
- Were claims paid, rejected or reduced?
- Were owners unhappy with any claim outcome?
- Did the same type of claim happen repeatedly?
- Can better maintenance or documentation reduce future disputes?
8. Understand exclusions and special conditions
The policy schedule and wording may include exclusions, warranties or special conditions that trustees should not ignore.
- Are there storm, maintenance, wear-and-tear or gradual-damage exclusions?
- Are there security requirements?
- Are there electrical compliance or maintenance conditions?
- Are there claim notification timeframes?
- Are trustees aware of what the insurer may require after a loss?
9. Prepare documents before renewal
A cleaner renewal process usually starts with better documents. Trustees and managing agents should keep the key insurance documents together.
- Current insurance schedule
- Latest renewal terms or quotation
- Policy wording
- Replacement valuation, if available
- Claims history
- Trustee or AGM minutes relating to insurance decisions
- Any owner complaints or recurring claim issues
10. Ask for a practical insurance review
Trustees do not need to become insurance experts, but they should be able to make informed decisions. A practical review helps trustees and managing agents understand where the current policy is strong, where it may need improvement, and what questions should be asked before renewal.
Lowensvlei Insurance Brokers assists trustees, body corporates and managing agents with practical sectional title insurance reviews across the Western Cape.
Quick checklist summary
- Check the building sum insured
- Confirm whether a replacement valuation is needed
- Review geyser and water-damage excesses
- Check public liability limits
- Confirm trustee indemnity cover
- Review fidelity cover
- Check common property and shared assets
- Review claims history
- Read exclusions and special conditions
- Prepare documents before renewal