Saturday, January 2, 2010

Wider Cover under Sectional Title Policy (Pages 16 - 21)

In addition to the above defined events, some examples of the additional cover under the buildings section includes:

Accidental damage to public supply connections between the property insured (or for which the insured is legally responsible) and the public supply or mains.

Loss of rent – usually caused by the above defined events

Alternative accommodation

Architects and other professional fees

Cost of demolition and clearing

Fire extinguishing

Escalations during periods of insurance and reconstruction and design

Malicious damage

The policies offered also include other sections such as office contents, money, glass, fidelity, business all risks, accidental damage, public liability including trustees indemnity, employers liability, machinery breakdown and SASRIA (political riot) which is a separate coupon policy.

These can be understood better by looking at a brief summary of the cover provided by those sections:

Office Contents

This cover is normally added to cover up to say R20,000 of the contents of the office of the body corporate, security office or supervisors office. This would also usually cover the furniture, fittings documents and data processor. May also cover foyer furniture, laundry and clubhouse contents While there are limits, extensions etc applicable to this, this section provides some basic cover for office contents from most of the perils listed under the buildings section.


Up to a certain limit, say R20,000, for loss or damage to money held by the body corporate. This would normally pertain to theft from the office safe, hold-up, theft while on the way to the bank etc, subject to certain exclusions.


This additional cover can be added to cover commercial glass such as shop fronts, entrance lobby glass, larger panes etc above normal domestic window glass. We always suggest to building owners / trustees to obtain a quotation to replace all glass shop fronts from a local glazier business and then insure accordingly.


This is additional cover against the loss of money or property stolen by an employee.
Thus, in your sectional title policy, you may be provided with say R20,000 or R50,000 cover – this essentially covers the body corporate should a trustee or employee be found to have stolen money and/or other property belonging to the insured or for which they are responsible. Under normal circumstances, the managing agent is NOT considered to be an employee.
The body corporate needs to check that they are also covered by the Estate Agents Affairs Board Fidelity Fund by ensuring that all arrangements with their managing agents and their banking and signing arrangements are in order and in line with legislation. This will involve checking the manner in which banking and signing is done. If in doubt, contact NAMA (National Association of Managing Agents) or a specialist sectional title legal consultant for further information. Additional cover may be needed – refer to PMR 29 (2) (b) above.
More about this at and

Business All-risks

This section covers items on an all-risk basis, subject to certain exceptions. One would cover items that would be at risk for theft or outside the premises from time to time. Signage that can be “lifted”, flagpole and flags, gate motors, air conditioner motors, intercom systems, cameras, electric fence energizers, satellite dishes etc. This widens the scope to include theft without actual forced and/or violent entry to the premises. Body Corporate’s often cover items such as lawnmowers, weed-eaters etc. on this basis.

Geysers / hot water cylinders can also be covered under all risks on a slightly different basis, however, this method is not that popular since a few of the sectional title insurers now cover geysers more comprehensively without this additional cost.

Accidental Damage

This is defined as accidental physical loss or damage to the insured property at or about the premises, not otherwise insured up to the amount stated and subject to certain conditions and exceptions.

The insurers we work with tell us that they view it as the insured’s “safety net” and covers accidental damage which may “slip between the cracks” of the defined events listed earlier under “buildings”.

Picture of spilt paint only – not damaged awning


This is usually defined as damages which the insured shall become legally liable to pay consequent upon accidental death of, or bodily injury to, or illness of any person (hereinafter termed injury), or accidental loss of or physical damage to tangible property (hereinafter termed damage) occurring during the period of insurance in, on or about the property insured and arising from the insured’s ownership thereof and elsewhere within the territorial limits, where the insured is working in the course of the business.

This is fairly wide cover again subject to certain extensions, exceptions, conditions, etc. can be discussed at some length.

Prescribed Management Rule 29 sets out what the trustees need to cover and sets out a minimum amount of R100,000. In today’s terms, this amount is inadequate and, in my opinion should be no less than R10,000,000 with more the better.

An important extension is trustees indemnity which C-Sure, FPA and CIA include. Trustees need cover for they may be held personally liable for losses incurred by owners or other parties as a result of their negligent actions or decisions. Personally, I would never offer my services as a trustee unless at least R500,000 trustees indemnity cover was in place.

Employers Liability

Defined events – Damages which the insured shall become legally liable to pay consequent upon death of, or bodily injury to, or illness of any person employed under a contract of service or apprenticeship with the insured, which occurred in the course of and in connection with such person’s employment, by the insured within the territorial limits and on or after the retroactive date shown in the schedule; and which results in a claim or claims first being made against the insured in writing during the period of insurance.
NB Bodies Corporate should see to it that all employees are registered with the Workman’s Compensation Commissioner. The body corporate’s insurance cover is “over and above” the compensation received from the commissioner (Refer Coida).

Machinery Breakdown

Sudden and unforeseen physical damage to the insured machinery being air-conditioning plant, automatic gates, garage doors, boilers, electrical switchgear, escalators, hoists, lifts and transformers forming part of the buildings insured under the building section of this policy;

a) whilst it is at work or at rest;
b) whilst being dismantled for the purpose of cleaning, inspection and overhaul or removal to another position or in the course of these operations themselves or subsequent re-erection

subject to certain exceptions and conditions such as wear and tear, gradual deterioration, the first amount payable stated in the schedule.


SASRIA cover covers certain areas that are normally excluded under buildings cover. This type of cover was born out of historic unrest in the country during the late 1970’s and covers the events where damage is caused as a result of riot, lock-out, strike, bomb blasts etc. SASRIA cover is relatively cheap and issued on a coupon basis, Always check with your broker / authorized service provider that this cover has been issued. We often find buildings at risk without this cover, mainly with older policies. This cover is a requirement– prescribed management rule 29.1(a) (ii) refers.

Referring back to what trustees should insure against in terms of management rule 29, the insurance products specifically designed for the sectional title industry is strongly advised. All too often we see policies in force simply covering buildings, often with or without public liability cover, let alone the additional cover set out above.