What Is Insured?

WHAT IS INSURED ON MY POLICY? – Community Schemes

So, this is a large topic to cover as it is dependent on your specific type of policy that is in place, which would then determine what cover you would experience. Over the next few weeks, we will be breaking down the different type of insurance covers and what to look for as well as how to read what is presented to you and what it means. 

To start it is always wise to understand what are the insured perils that are covered on my policy. When we speak of insured perils, we are referring to the event that could cause loss or damage to your home, personal items and business, for example fire, storm damage and lightning to name a few. Where do you find this?  On a number of policies, it is reflected by the breakdown on the actual schedule that is presented to you as well as and in conjunction with the policy wording for the product that you have insured for. If you do not have this documentation this is the place to start, contact your insurance broker or insurer where direct for this information.

On most policy schedules you will note there is a page named/ labeled as the premium summary that is presented, this is a good place to get an overview of what type of cover is included on your specific policy schedule.

To start we will take a look at an example of a summary page for a community scheme.

COMMUNITY SCHEMES/SECTION TITLE/ BODIES CORPORATE

From the above picture, this is an example of the cover on a Sectional Title scheme, from the premium summary, you will note the following:

• Your buildings sub section A are insured for R 30 000 000.00 for a premium amount of R 1500.00 per month. This refers to all structures that are part of the community scheme including the common area buildings and clubhouses etc. It is always wise to ensure that every structure reflected on your SG plan has been included in this cover. What the buildings are covered against, would be referenced in the policy wording under the building section.

• Included in section A, Sub section B is Rent, this refers to loss of rental or alternate accommodation in the event that an insured peril renders the unit uninhabitable (this is not in terms of inconvenience but has to be unsuitable for living in terms of health risks or the unit has been completely destroyed etc.) or untenantable. Here the sum insured amount is R 7 500 000.00. You will notice no premium is applied here as this is part of the insurer’s product offering that is built into the product structure. This refers to the amount of cover for the entire scheme in place. How it is worked out individually and in the event of a claim, it is calculated on the actual amount of rental loss, where the building or unit is leased to a tenant in terms of a signed lease agreement or if it is owner-occupied, it is paid on reasonable rent that would have been paid for on a similar unit.

** Very Important to Note here what your policy wording states as to when this cover will be engaged as well as to establish with your broker as to what constitutes uninhabitable or untenantable. **

• Included in sub section C Liability is for the sum insured amount of R 50 000 000.00, this is the dreaded and necessary public liability cover. This cover provides the insured party (you) with protection against claims resulting from injuries and damage to other people or their property. You will note on this example there is no premium payable for this however it is built into the product offering, this is not the case on all insurance products and a number of community schemes may attract a premium for this cover.

• Section B Business All Risk represents cover for up to R 50 000.00 for a premium payable of R 125.00 per month, this cover is for any risk that the policy cover does not omit, or at times it will be in place to specify items that may exceed the policy indemnity limits( this is the highest amount an insurer will pay on a claim for a specific peril/event) in place. For example, if there is power surge cover on the policy but it is limited to R 20 000.00 and the CCTV System that is installed at the complex, to replace would cost R 50 000.00 then that would be specified here to ensure full comprehensive cover is in place.

• Section C Electronic Equipment shows there is no cover on the policy for this. This does not always mean there is no cover for your electronic items, the cover may be placed under another section of the policy for example the Business All Risk. It would be dependent on what type of cover your equipment needs, to establish where it is placed. If you unsure of where specific equipment needs to be insured, speak to your broker about this.

• Section D Trustees Indemnity cover for up to R 5 000 000.00 for a premium amount of R 54.00. This is the cover in place for the members of the trustees, in the event of any actual or alleged wrongful acts, negligence or fraud that is damaging to the community scheme and its occupants and owners.

• Section E Fidelity there is no cover on this policy. This is the insurance cover in place on the complexes funds against losses incurred by dishonesty or fraudulent acts. In a lot of cases the community schemes funds may be insured through a standalone insurance product or as part of an arrangement with the managing agent/representative, where the cover is looked at as a whole for all their clients. Again, it is important to speak to your managing agent/representative and broker for this information.

• SASRIA – This is the Special Risks Insurance Association which is unique cover against risks such as civil commotion, public disorder, strikes, riots and terrorism. This cover was engaged by properties that experienced damage in the July 2021 riots and is a standard on all policies.

We hope that this has helped you in your understanding of the insurance policy in place in your Community Scheme.