How To Get More From Building Insurance

Written by Theresa du Preez, General Manager, Insure City Insurance Brokers (Pty) Ltd

Do you represent a body corporate, home owners’ association or property group? Are you a trustee, director, landlord or property owner?

It’s likely that you’ve applied for building insurance. Though you might be an expert in this type of cover, you could still get plenty of value from the below information on making the most of it.

Doing this could benefit not only you but also your tenants and unit owners.

Define what your property is (and isn’t).

For most insurance policies, a building is a structure – made of brick, stone, concrete or metal – built on a metal framework. Its roof can be covered with slate, tiles, concrete, asbestos or metal.

In general, these building materials are referred to as standard construction. It’s important to inform your insurer whether your building or roof is constructed with any other type of building material since these come with risks that could affect your insurance cover.

Remember, your building can also include outbuildings and certain structures, fixtures and/or fittings that are permanently built or installed on the property you own or are legally responsible for. When you don’t take these into consideration, your property can be underinsured, and your insurer will apply Average in the event of a claim.

Find out what’s excluded from your policy.

Your insurance policy will generally list items that cannot be insured (so that’s a good place to start looking). These are items such as:

  • Above-ground portable swimming pools
  • Mobile air-conditioning units
  • Unfixed/movable floor coverings, curtains and window coverings inside a unit
  • Illegal connections and/or renovations not approved by the Trustees/Directors
  • Property not complying with National Building Regulations

You must arrange your own short-term personal insurance cover for possessions inside your unit or house because these items aren’t covered by a building insurance policy.

Calculate your reconstruction cost properly.

To effectively insure your building, you’ll need to know what its total reconstruction cost is. To do this right, you must include the following in your calculations:

  • Cost of new material to rebuild the building
  • Architect-, engineering- and municipal fees
  • Demolition cost
  • Removal of debris
  • Securing of the building site
  • Compliance with national, local building or other regulations
  • VAT

Current regulations require body corporates to do a replacement cost valuation every 3 years.

Know what is common property.

Common property is the part of the property that does not form part of a unit and is described on your sectional plan. Owners share in the common property through their participation quota. This can include:

  • Gardens
  • Driveways
  • Footpaths
  • Walkways
  • Swimming pool areas
  • Tennis courts
  • Lapas

Knowing what to insure as common property can save you money since the insurance premium can be shared fairly between owners.

Identify office contents and insure them as such.

Property that belongs to your body corporate or company – and for which they are responsible – can broadly be defined as office contents. These include, but are not limited to:

  • Computers and electronic equipment
  • Tools, gardening, cleaning and maintenance equipment
  • Office furniture and fittings
  • Gym equipment and swimming pool accessories

You must be certain that office contents are insured for their replacement value and that the correct value is declared to your broker. If not, your insurer will apply Average in the event of a claim.

Determine who is an employee (and who isn’t).

An employee is anyone employed by means of a written contract of service or apprenticeship. That said, the following individuals are excluded from this definition:

  • Employees of unit owners
  • Appointed contractors and sub-contractors
  • Managing agents and/or their employees

Employees must be registered with the Department of Labour, the Compensation Fund. Additional cover for accidental injuries whilst on duty can be arranged through your broker.

Insure all exterior fixtures and fittings.

Fixtures and fittings are any item that’s permanently attached to, mounted to, or installed to the exterior or outside of a building. These include, but aren’t limited to:

  • External pipes
  • Mounted air conditioners
  • Carports
  • Awnings

These items will increase the insurance amount on your building or unit. It’s therefore important that the replacement value of your building or unit is updated regularly with these in mind. Portable generators are not included under these items.

Identify your all risk items.

These items can be used or taken anywhere in the world or be exposed to the outside world on the premises, e.g. gate motors, portable generators, but must be specifically declared for insurance purposes. In other words, you’ll have to pay an additional premium for the specified items.

You must ensure that these specified items are insured for their replacement value. For your own benefit, verify your policy schedule to ensure that these items are listed at the correct value.

Finally, it’s important to note that personal property of owners or tenants isn’t included under all risk items. The owners and/or tenants must arrange their own personal short-term insurance cover.

One last word

Now that you have eight tips on making the most of your building insurance, you can avoid many headaches often faced by property owners, home owners’ associations and body corporates. The next step is to get your insurance cover in place and working for you …

For smart building insurance and advice, visit the Insure City website today.