Ria Furriel | Partner | Community Insurance | King Price Insurance | mail me |
Ask any sectional title body corporate what keeps them awake at night, and the recurring issue of maintenance – and who’s responsible for it – is most likely the answer. The solutions are often far from straightforward.
According to the Sectional Titles Act, the body corporate is responsible for the maintenance of the sectional title’s common property, which includes the outside of buildings, roofs, common gardens and parking bays, driveways, security systems, and shared amenities.
Who is responsible?
Owners are generally responsible for what happens inside their own units, and any exclusive use areas they may have been granted access to by the body corporate. It sounds straight-forward – but as any sectional title owner will tell you, disputes are all too common.
Say, for example, a roof of a unit occupied by a tenant collapses due to the body corporate’s failure to maintain the common property structure. Who is responsible? Unless the owner can prove clear negligence by the body corporate, this would be for their account. And unfortunately, if losses are incurred as a result of poor maintenance, an insurer may even repudiate such a claim.
Sectional title maintenance is a bit of a minefield. To complicate things, the lives of body corporates aren’t made any easier when unit owners are behind on their levies.
The Sectional Titles Schemes Management Act (STSMA) requires body corporates to have a maintenance budget but when owners default on their levies, this budget is affected, which means there isn’t enough money available to do maintenance.
The STSMA also obliges body corporates to assess the value of all assets and produce a legally compliant 10-year maintenance, repair, and replacement plan (MRRP), which must be updated every year. They must also do a building valuation, that needs to be updated every three years, and having insurance cover is a legal requirement.
Controlling the costs of insurance claims
To try to control the costs of insurance claims, ensure building compliance and extend the useful life of assets, many insurers are using central management systems to administer claims.
These systems save time, money and headaches by allowing all claims to be logged electronically, be instantly authorised by the insurer, and automatically scheduled with an approved service provider for immediate repair – with no human interaction. In some instances, these systems also enable certain claims to be paid out with no excess.
Traditionally, one of the biggest challenges of sectional title insurance has been a lack of updated information and transparency around assets. Insurers use the data they collect during claims handling to continuously update their underwriting philosophy, rating structure and excesses in line with current trends. These trends include power surges due to load shedding, theft of solar panels and so on.
By maintaining their assets more efficiently, sectional title developments give insurers the ability to create more accurate risk profiles – which often means lower premiums. They also enable predictive maintenance, with connected systems able to detect impending issues before they become problems. If more owners realise their critical role in this ecosystem, and keep their levies up to date, a lot of maintenance challenges would be eased.
