FREQUENTLY ASKED QUESTIONS
As a specialist building underwriter, CIA understands the nuances of the industry better than most. We stay abreast of legislative and regulatory changes and adapt rapidly to ensure our products are compliant, and our clients protected. Our people-focused business relies on sharing – sharing of knowledge, skill, passion and expertise. We do this internally, empowering a powerful team to deliver consistently to our brokers and their clients.
Below are a few of the frequently asked questions fielded by CIA employees and representatives. Should you have any further queries, please feel free to contact us directly on 0861 242 777.
ARE GARDENS OWNED BY UNIT OWNERS OR DO THEY FORM PART OF THE COMMON PROPERTY?
Garden areas in sectional title schemes are generally common property.
Common property is owned by all owners in undivided shares. In terms of section 37(1) (j) of the Sectional Titles Act 95 of 1986, the body corporate is obliged to maintain and repair the common property.
However, garden areas can be subject to exclusive use rights and can be determined by reviewing both the schemes conduct rules and the sectional plan. This type of exclusive use is granted by passing a special resolution at a special general meeting in favour of a particular owner is only a right registered in the rules of the scheme.
If the garden areas are exclusive use areas then although all owners actually own the gardens in undivided shares, the usage of those gardens is limited to the holders of the exclusive use rights.
If the garden areas are not exclusive use areas then they are unregulated common property, owned by all owners in undivided shares, and theoretically all owners are able to use them. The fact that the gardens are walled off means that these areas are inaccessible to other residents in the scheme and that the owner of the section next to the walled off garden area has what is called de facto or ‘factual’ exclusive use of the area.
NB. For a more detailed explanation – please refer to Sections 27 and 27A if the Sectional Titles Act.
WHO IS RESPONSIBLE FOR MAINTENANCE AND REPAIR OF BLOCKED SEWERAGE PIPES?
In terms of the provisions of the Sectional Titles Act 95 of 1986, the act defines the following principles relating to pipes in sectional title schemes:
- If the pipe is part of your section it is your responsibility unless the pipe serves a number of sections of the sectional title scheme (i.e. more than one section), then it is the body corporate’s responsibility to maintain the pipes in good state of repair.
- If the pipe is outside your section (i.e. on the common property) the body corporate must maintain and repair it even if it only serves your section.
WHY ASSETS ALL RISKS VS TRADITIONAL PERILS-BASED COVER?
We all know that under a normal building combined perils-based policy, the insurer only covers defined events, i.e. listed perils, such as fire, lightning, explosion, storm, wind, water, hail, theft, malicious damage, earthquake etc.
In other words, if the cause of the loss or damage is not one of the listed perils, there is simply no cover. This is a very restrictive form of cover.
Assets All Risks policies on the other hand are much simpler. The principal is that everything is covered unless it is specifically excluded. In other words, if the cause of the loss or damage appears on the list of exclusions, it is not covered. If it does not appear, then it is covered.
CIA’s policy wordings are all on a Broadform Assets All Risks basis and are written in plain language which makes them easier to read and understand. No longer does the client have to wade through all the technical insurance jargon to try and understand what is covered and what is excluded.
WHAT IS THE PURPOSE OF CIA’S RISK MANAGEMENT SURVEYS?
CIA will conduct fire risk surveys on selected buildings based on certain criteria such as the occupation of a building, the building sum insured and the location of the building.
The main purpose of our surveys is to focus specifically on the fire requirements necessary in terms of our current legislation and regulations and to highlight potential hazards and dangers, as well as any non-compliant issues with the fire regulations that may be evident. By informing you of any areas of non-compliance we are able to reduce potential loss exposures to your client and to us as the Underwriter.
A risk survey does not relieve the property owner of their duty to make a full disclosure of all material facts. The information contained in the risk management survey report is based on what the surveyor has seen and what was disclosed to him at the time of the survey.
CAN TRUSTEES DISCONNECT SERVICES FROM NON-PAYING MEMBERS
Many trustees are disconnecting services when some owners do not pay their levies. Can Trustees disconnect services to non-paying owners?
The answer is no.
In 2000, a body corporate disconnected the electrical supplies to the sections of owners who disputed the method of calculation, and failed to pay a special levy raised to pay for improvements to common property. The affected owners made a joint and urgent application to the High Court, as a result of which the Court ordered the immediate reconnection of the electrical supplies to the sections.
The Court also ordered the managing agent and body corporate to jointly pay the costs of the application.
HOW DO HOME IMPROVEMENTS OR RENOVATIONS AFFECT YOUR BUILDING INSURANCE?
- Many people employ approved building contractors to undertake and manage a renovation project.
- Where a contractor is employed the contractor will traditionally have an Contractors All Risk (CAR) policy in place which would include contract works, Employers Liability, Public Liability, hired plant etc. Please ensure that this cover is in place before commencing with the project.
- Due to the cost savings many people are opting to self-manage renovations.
- Where renovations are self-managed the impact of these alterations on your building insurance cover must be considered.
- In the course of erection and/ or completion, alteration and until final completion of the contract the insured perils under your building insurance will be amended and cover restricted.
- When attempting a DIY project the Insurer should be notified and the restrictions in cover noted.
- An example of an uninsured incident which can occur would be unwittingly drilling through a water pipe whilst installing a new shower, sink or cupboard.
- After renovations, the value of the property will have increased and it is essential that your building sum insured is adjusted to include these improvements.
- Built in kitchens and revamped bathrooms for example form a part of your building sum insured. Upon completion of these projects the sum insured of the entire building must be increased to the new replacement value.
When dealing with repair and maintenance work to buildings, property owners, body corporate trustees, and managing agents must familiarise themselves with and at all times comply with the Occupational Health and Safety legislation or else they could find themselves criminally liable should a worker be hurt or fatally injured on site.
WHAT CAN BE DONE TO DETER THIEVES AND PROTECT YOUR PROPERTY?
- Perimeter protection is your first line of defence – install security fencing including palisades, electric fencing, barbed wire and the like.
- Ensure that the access to your building is controlled.
- Consider fitting access control locks on entrance doors to prevent unauthorised entry to the building.
- Locks and padlocks on external doors and gates should be SABS approved.
- Theft of copper piping from outside walls is increasing daily and vacant buildings seem to be the prime target.
- Proper perimeter protection should deter thieves.
- Where buildings are vacant employ the services of professional security guards on a 24 hour basis or a radio alarm linked to a control room with armed response.
- Closed Circuit Television (CCTV) can deter thieves and capture evidence of burglary, theft and malicious damage.
- Consider applying “smash and grab” film to windows to deter burglars and prevent looters from gaining access through shop windows.
- Deter entry to the building by fitting burglar bars and security gates to all opening windows and exterior doors.
- Do not leave valuable items in common view.
- Lock away portable electronic equipment when the premises are closed.
- Protect air conditioning compressors on the outside of the building with metal mesh cages
WHAT AM I COVERED FOR WITH A BUILDING INSURANCE POLICY?
We will pay for the repair or replacement of the insured property, resulting from damage which is not excluded in this section or is not excluded under the General Exclusions, occurring during the period of insurance.
This is clear and simple, “we will pay for the repair or replacement of the building if there was damage” – and damage, as previously mentioned, is clearly defined as:
Buildings and Contents Specific Definitions applicable to this section only
Means physical loss or damage caused by a single, sudden, unintentional and unexpected event, which occurs at an identifiable time.
Therefore, any damage that is unforeseen and occurs suddenly is covered, unless it is specifically excluded. No other perils, or defined events, need to be mentioned or listed. This definition of “Damage”, replaces the old list of insured perils, which was all the client was covered for previously. This is the main concept and benefit of Broadform Assets All Risks cover.
WHEN IS A LOSS ADJUSTER APPOINTED?
Based on the sketchy information at hand and in line with our service excellence approach, a loss adjuster is appointed only to find that the damages are in fact minimal or that the cause of the loss is not covered in terms of the policy. At this stage the cost of the claim has already escalated from what it should have been due to unnecessary fees incurred.
The contrary is also true; losses are reported with relatively low reserves which create the perception that the loss could be handled on a “fast track” basis. By the time the full extent of the loss becomes apparent the extent of damages has escalated and the time in which the claim could have been settled has increased unnecessarily, much to the annoyance of the client.
The prudent broker should take the time to calm the distressed client, allowing the client to provide a less emotional and more realistic report on the loss. The broker should obtain enough information regarding the loss to make a report with reasonable accuracy, i.e. a full description of the cause of the loss and the extent of the damages which will assist in determining what actions should be taken to minimise the loss.
The accuracy and comprehensiveness of information collected at the first point of contact with the client after a loss would go a long way in managing claims costs and improving client service.