According to the Sectional Titles Act, “Building” means a structure of a permanent nature erected or to be erected and which is shown on a sectional plan as part of a scheme. A building though, according to the definition of a buildings policy wording is somewhat differently described. So, to be clear on what is being covered, we need to look at an actual sectional title policy and it’s definition of “buildings” :
“Buildings: Shall be deemed to include outbuildings and landlord’s fixtures and fittings therein and thereon including fitted carpets and lifts with all associated equipment, transformers, motors, boilers, air conditioning, standby generators and walls (except dam walls), gates, posts, fences (excluding hedges) and sporting/recreational structures including but not limited to swimming pools, tennis courts (including floodlights), sauna/spa baths/ jacuzzis and water pumps, pool machinery borehole motors and brick, tar, concrete or paved roads, driveways, parking areas, paths or patios all the property of the insured and situated as stated in the schedule. Unless otherwise stated in the schedule, the buildings and outbuildings shall be constructed of brick, stone, concrete or metal on metal framework and roofed with slate, tiles, metal, concrete or asbestos.”
This tells us quite a bit about what is being covered. It is clearly all fixed improvements made to the property over and above the land itself.
Basically, if it is part of the building, it is usually covered. By being part of, I mean it is a fixture - for example a fitted carpet, built in cupboard, light fitting etc. Contents are excluded. Contents should be covered by an owners personal / domestic insurance policy. The land is excluded. After all, if the buildings are totally destroyed, it follows that the land will still be left.
Some important points should be noted from the insurance policy definition.
Take for instance “…and situated as stated in the schedule.” The risk address i.e. the property itself will need to be correctly defined. If the buildings defined in a policy extend over to another property, or over a number of plots (or erven), take care to note all the erven as the insured properties, or at least to make sure that the address is clearly indicated.
Wooden structures or thatch need to be dealt with carefully. It cannot be assumed that wooden structures and thatch roofs will be covered – they are not according to the definition above. Non–covered items such as thatch need to be dealt with separately i.e. the body corporate trustees need to make it clear to the insurer that the additional risks need to be covered or added to the policy, even if for an additional premium.
However, note that the Sectional Titles Act definition is what is being referred to in prescribed management rules, so you will need to take extra care in respect of thatch, wooden structures etc whether or not they are shown on the sectional plan.
Most insurers apply a loading to the rate if a thatch lapa is bigger than 20sqm and closer than 4 metres to the building. Important - Owners with lapas need to refer to their brokers/insurance for advice and find out the underwriting requirements under their specific circumstances.
There are a few insurance products in the market, which have been specifically designed to suit the sectional title environment in South Africa. Corporate Sure (C-Sure Underwriting Managers (Pty) Ltd) and CIA (Commercial and Industrial Acceptances (Pty) Ltd) and are presently the leaders in the field of these products. They have moulded their policy wording to suit the Sectional Titles Act, particularly with reference to the provisions set out by Management Rule 29, detailed earlier. The defined events set out in one of these policies are summarized (more or less), as follows:
Damage by the perils described
1. Fire, lightening, thunderbolt, subterranean fire, explosion, meteorite
2. Storm, wind, water, hail or snow other than
a) that arising from its undergoing any process necessarily involving the use or application of water
b) wear and tear or gradual deterioration
c) loss or damage
(i) to retaining walls
(ii) caused or aggravated by
– subsidence or landslip
– the insured’s failure to make all reasonable precautions for the maintenance and safety of the property insured and for the minimization of any destruction or damage.
4. Aircraft and other aerial devices or articles dropped there from
5. Impact by animals, trees, aerials, satellite dishes or vehicles excluding damage to such animals, trees, aerials, satellite dishes, vehicles or property in or on such vehicles.
6. Theft (or any attempt thereat) accompanied by forcible and violent entry into or exit from such building, If any building insured or containing the insured property becomes unoccupied for 30 consecutive days, this item is suspended as regards the property affected, unless the insured before the occurrence or damage obtains the written agreement of the company to continue this extension. During the period of the initial vacancy of 30 consecutive days, the insured shall become a co-insurer with the company and shall bear a pro-rata proportion of any damage equal to 20% of the claim before deduction of any first amount payable.
(in short – there is theft cover for damage to the building where break-in or break-out occurs, however, when unoccupied, this cover may be limited or fall away)
7. Accidental damage to glass and sanitaryware etc is covered, yet chipping, scratching and other disfiguration is excluded.
8. Accidental breakage or collapse of radio or television aerials, satellite dishes, aerial fittings or masts.
9. Accidental damage including electrical or mechanical breakdown to pumps and machinery for swimming pools, boreholes, sauna/spa baths/Jacuzzis, automatic gates and garage doors in domestic use. The company shall not be liable for damage to property resulting from or caused by wear and tear, gradual deterioration, insects, vermin or any process of cleaning repairing altering or restoring, corrosion, erosion, deposit or scale, sludge or other sediment, chemical action or rust. The company’s liability shall usually not exceed R1,500 for any one event.
10. Bursting, overflowing or escape of water or oil from tanks, apparatus or pipes including any fixed water or oil-fired heating installation including damage to such tanks, apparatus or pipes but excluding damage as a result of wear and tear and gradual deterioration.