Reviewed · TitanDC
What the law requires
The Sectional Titles Schemes Management Act and its Prescribed Management Rules set the baseline. A body corporate must insure the buildings and all improvements to the common property to their full replacement value, and must maintain that policy. A scheme’s own rules can add to this; they cannot take it away.
- Buildings and improvements to common property, at full replacement value
- The perils the Prescribed Management Rules list, including fire, storm, flood, burst geysers and pipes, and impact
- Public liability cover for the common property
- Fidelity cover for money handled on the scheme’s behalf
- A replacement-value assessment, reviewed and put to the annual general meeting
Who insures what: the line most people get wrong
The body corporate insures the building. An owner insures what is inside their section and their own liability. That sounds simple until a burst pipe damages a kitchen, at which point the question is whether the pipe, the wall and the cupboards belong to the scheme or the owner. The answer comes from the registered sectional plan and the rules, not from what feels reasonable.
- The scheme: structure, roof, external walls, common pipes and cabling, and the common property itself
- The owner: contents, fittings and finishes inside the section, and personal liability
- Commonly disputed: geysers, built-in cupboards, internal non-structural walls, floor coverings
- Settle it in writing before a claim, not during one
Underinsurance is the failure that actually costs money
Replacement value is what it would cost to rebuild today, including professional fees, demolition and debris removal, and compliance with current building regulations. It is not the municipal value, and it is not what the units would sell for. When the sum insured is short, the average clause applies and every claim is reduced in proportion — including small ones.
- Insure for rebuilding cost, not market value or municipal valuation
- Include professional fees, demolition, debris removal and compliance upgrades
- Have the assessment reviewed regularly, not once when the scheme was registered
- Building costs move: a figure set five years ago is very likely short today
What trustees are personally responsible for
Trustees must act with the care of a reasonable person handling someone else’s affairs. Letting the policy lapse, insuring for a figure nobody has reviewed, or failing to put the replacement value to the annual general meeting are all failures of that duty. Trustees’ liability cover exists precisely because the obligation is personal.
- Put the replacement value to the AGM and record the decision
- Keep the policy current and the premium paid
- Disclose anything the insurer would consider material, including known defects
- Consider trustees’ liability cover for the decisions the role carries
Questions worth asking before the next renewal
A renewal notice is not a review. These are the questions that surface the gaps, and an adviser should be able to answer them about your specific scheme rather than in general.
- When was the replacement value last professionally assessed, and by whom?
- Does the sum insured include professional fees, demolition and compliance upgrades?
- What is the public liability limit, and is it realistic for this scheme?
- Is there fidelity cover, and does it match the money the scheme actually handles?
- Are the geysers insured by the scheme or by owners — in writing?
- Has anything changed, such as a new structure or a change of use, that the insurer has not been told about?
Common questions
Is body corporate insurance compulsory in South Africa?+
Yes. The Sectional Titles Schemes Management Act requires a body corporate to insure the buildings and improvements to common property for their full replacement value and to keep that cover in place. It is a statutory duty, not a decision trustees may take either way.
Does the body corporate’s policy cover what is inside my flat?+
No. The scheme insures the building and common property. Your contents, fittings and finishes, and your personal liability, are yours to insure. Most owners take household contents cover and, where a bond requires it, confirm the scheme’s building cover separately.
Who pays for a burst geyser in a sectional title scheme?+
It depends on where the geyser sits and what the sectional plan and the scheme’s rules say. In many schemes a geyser serving one section is treated as that owner’s responsibility, while resulting damage to the building may fall to the scheme’s policy. It is the most common dispute of the lot, and worth resolving in writing before it happens.
What happens if the scheme is underinsured?+
The average clause applies. If the building is insured for less than its replacement value, the insurer reduces claims in the same proportion — so a scheme insured for two-thirds of its rebuilding cost can expect roughly two-thirds of a claim, including a small one, not only of a total loss.
Can owners be levied for an uninsured loss?+
Yes. If the scheme cannot recover a loss from insurance, the cost falls to the body corporate, which is funded by its owners through levies — often a special levy raised for exactly this. That is why the replacement value matters to every owner, not only to the trustees.
Sources
This page cites the legislation and regulators it relies on, so you can check it.
General information about insurance for community schemes in South Africa, not advice. What a particular scheme must insure depends on its registered sectional plan, its rules and its policy wording. TitanDC is an authorised financial services provider, FSP 8972.