Natural disasters and damage to my sectional title unit – What do I need to know?

Insurance regarding sectional titles can become confusing. That is why it’s important to understand how insurance within a sectional title works.

It is the legal responsibility of your Board of Trustees to ensure that all units are sufficiently insured. This insurance is called Building insurance and according to the Sectional Titles Act a “building” is “a structure of a permanent nature erected and which is shown on a sectional plan as part of a scheme.” That is also why it is so important that any changes to your property should be discussed with the board and necessary amendments should be made to the sectional title plan where applicable.

If you do not notify the board regarding these changes in order for them to update the replacement value of your property on the insurance policy, they will invoke the “average” clause included in most of the body corporate insurance policies. The impact this clause can have on you is disastrous. You will then be deemed your own insurer and legally held responsible for the shortfall between the amount the unit is insured for and the amount the assessor has established as the actual cost to replace and repair your property.

Your building insurance (which covers the structure) should include catastrophes. This can include runaway fires, storms and floods, earthquakes and other natural disasters.

It is important to remember that this insurance does not include your household content or any other structures not considered permanent or included within the sectional plan scheme. These remain your responsibility and must be insured under your own personal insurance policies.

Owners are advised to ensure that the board has adequate insurance and can request a copy of the policy. The board is also advised to gather expert opinion before making any decisions since they can be held legally responsible if any negligence within their decision-making can be found.

To find out whether your building insurance is sufficient or for any other advice and queries, please contact us here.