Hot Water Cylinders / geysers form part of the building. If damaged by one of the events defined, that hot water cylinder is covered.
We all know that geysers rarely, if ever, burst! They “pack up” and when this happens and there is no drip tray, quite a bit of damage can result! Strictly speaking, insurers should pay for the resulting “water damage” only under such circumstances and leave the geyser for the owner to replace. It has become standard procedure, however, for plumbers to report “burst’ geysers and as such insurers do pay the claims. Most insurers have adopted this standard, including bank insurers for normal domestic policies. The way around this has been for insurers to apply compulsory excesses.
In the past, sectional title policies often carried sliding scale excesses, which many felt was the fairest way to deal with this issue. Under this scenario, geyser excesses were structured according to its age. A new geyser would carry an excess of say R500, but a nine year old geyser’s excess would be 75% of it’s cost of say R3,000.
Another option was to insure a geyser, without excess, on an all risks basis. On this basis, the insurer agrees to replace the geyser if it becomes irreparable, almost treating insurance as a means of financing the inevitable loss. Depending on the average age of the geysers in the block, this method could be very attractive indeed. For each owner to pay R25 per month extra for this cover where the geysers are all 10 years or older, this could be a viable option..
The various insurance companies and underwriting managers are competing and introduce new innovative products and enhancements from time to time. More recently, the fixed geyser option, geyser excess buy backs, free excess options and so on are being offered. Some of the main sectional title underwriting managers offer geyser maintenance and emergency all hour call centre numbers for geyser bursting / repairs. It is up to the trustees to check with their insurance advisors / brokers / managing agents that the most appropriate options are offered to the body corporate and changes are brought to trustees attention from time to time.
We all know that geysers rarely, if ever, burst! They “pack up” and when this happens and there is no drip tray, quite a bit of damage can result! Strictly speaking, insurers should pay for the resulting “water damage” only under such circumstances and leave the geyser for the owner to replace. It has become standard procedure, however, for plumbers to report “burst’ geysers and as such insurers do pay the claims. Most insurers have adopted this standard, including bank insurers for normal domestic policies. The way around this has been for insurers to apply compulsory excesses.
In the past, sectional title policies often carried sliding scale excesses, which many felt was the fairest way to deal with this issue. Under this scenario, geyser excesses were structured according to its age. A new geyser would carry an excess of say R500, but a nine year old geyser’s excess would be 75% of it’s cost of say R3,000.
Another option was to insure a geyser, without excess, on an all risks basis. On this basis, the insurer agrees to replace the geyser if it becomes irreparable, almost treating insurance as a means of financing the inevitable loss. Depending on the average age of the geysers in the block, this method could be very attractive indeed. For each owner to pay R25 per month extra for this cover where the geysers are all 10 years or older, this could be a viable option..
The various insurance companies and underwriting managers are competing and introduce new innovative products and enhancements from time to time. More recently, the fixed geyser option, geyser excess buy backs, free excess options and so on are being offered. Some of the main sectional title underwriting managers offer geyser maintenance and emergency all hour call centre numbers for geyser bursting / repairs. It is up to the trustees to check with their insurance advisors / brokers / managing agents that the most appropriate options are offered to the body corporate and changes are brought to trustees attention from time to time.
Geyser / Hot Water cylinder replacement and resulting damage from leaking cylinders have more recently been identified as the largest claims cost driver by far. We predict a lower level of cover for geysers in future. More about geysers on http://www.addsure.co.za/ and Persoanl Finance Article downloadble from http://www.addsure.co.za/
Acknowledgement - The cartoon above by Colin Daniels, Personal Finance Magazine.
Article by the autor of this blog.
