Eric asked about his sectional title flat. Specifically he wants to know about the geyser and built-in cupboards.
Body Corporate Represents Owners
Eric correctly states that the tenant is responsible to insure his/her own assets (content). The Body Corporate has a responsibility to insure the building and common property.
There-in lies the answer. It is the responsibility of the Trustees of a Sectional Title Scheme to insure the property at a correct replacement value. It does not make sense that each owner should insure his own section separately – it will be a nightmare!
Since the building is insured, it means that you have very much the same type of cover that you would have under the building section of your personal policy. Therefore geysers and cupboards and built-in stoves and ovens will be covered against “normal” perils. (Please check this statement to the policy on your scheme!)
The minimum cover would be fire. If the flat burns down, the insurance will cover the damage. But I do believe that most schemes will have policies that also cover water damage and burst pipes (burst pipes are always bad news), storm damage, and water damage. to name a few.
I love the trustee concept in general. Trusteeship comes with fiduciary responsibility – acting in the best interest of a beneficiary or the person who entrusted you. That means the Trustees must look at protecting your asset in a responsible way – including insuring it correctly.
It is important that you ask the Body Corporate or Trustees, if you prefer, about the insurance and ensure what you are covered for. If they do not know, the broker should know. But as Trustees they cannot ignore the request.
The insurance premium is part of the levies and you contribute according to your participation ratio.
Lastly, if you have renovated your flat and upgraded it, it is important that you disclose it to the Body Corporate. If the building has standard Formica kitchen tops, but you put in Cherrywood cupboards with marble tops, you will be underinsured, which can cause problems if there is a claim.
Since the Body Corporate is the Insured, all claims will have to go through them. If a geyser bursts, the body corporate will submit the claim (as it were on behalf of the owner). If the claim is settle in cash, then it is paid to the Body Corporate will then pay the money to the owner, as applicable.
Hope it answers the question? if not, use the comments below.
If you have any short term insurance questions, please ask them in the comments below that I can try to answer it. You are more than welcome to contact me via the ContactForm.