CUTTING COSTS AT WHOSE EXPENSE? PART 1 OF 3 – CIA INSURANCE

Today most complexes have concerns regarding budget are under pressure to save money in any way possible.  The danger herein is that regular maintenance is usually the first area in which a Body Corporate tries to cut costs.

Body Corporate Insurance is regulated by the Sectional Titles Act and Section 37 of the Act specifically sets out the functions of the Body Corporate.  Management Rule 29 deals with the Insurance of the buildings and the cover which the Trustees must ensure is in place. 

The purpose of insurance is to provide cover against sudden and unforeseen events, and therefore does not cover loss or damage caused by or attributed to the lack of maintenance and the cost of maintenance to the insured property. In short, an insurance contract must not be seen as a maintenance contract.

Wear and tear, gradual deterioration, rust, corrosion, mildew and damp are occurrences which happen over a period of time and will therefore not be covered in terms of an insurance policy.

All too often claims are repudiated due to the lack of regular maintenance causing financial exposure and unnecessary dispute between unit owners, Trustees and the Insurance Company.

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