Bodies corporate and geyser claims
Geysers are high claim items in sectional title and other community living schemes. For insurers, underwriting managers and trustees, geyser insurance is a huge challenge. About 70% of all household insurance claims are related to burst geysers or geysers in need of repair or replacement.
Managing agents of bodies corporate need to make sure that all owners are supplied with copies of their building’s insurance policy wording so everyone concerned is aware of what is covered and what limits are in place.
The body corporate’s duty
Insurance policies for bodies corporate typically provide cover for geysers as well as the resultant damage. However, this needs to be checked with the insurance broker as it can differ widely from one insurer to the next.
Trustees have a fiduciary duty (a duty of good faith and trust) to ensure that their scheme is adequately insured. According to the new Sectional Title Act, trustees can be held personally liable if they neglect this duty, which may cause underinsurance or, even worse, the averaging of claims.
It is also important to follow the correct procedures as set out in the policy document. Some insurers will limit the settlement amount on a geyser if the correct procedures were not followed. For example, most insurance companies have a call center where the insured can find a plumber to assist with emergencies.
What is covered?
Firstly, ensure that your body corporate’s insurance includes geyser cover – some schemes elect to exclude geyser cover, leaving each owner responsible for their own geyser insurance.
A burst geyser can leave a trail of destruction – damage to carpets, flooring, cupboards or even the unit below. Generally, the resultant damage is covered provided that the geyser is compliant and that there was no negligence on the part of the owner. Again, it is best to check this with your broker.
Usually, the body corporate’s building insurance will cover a burst geyser. Some insurance companies only provide cover for geyser replacement, others offer cover for repair and replacement. It is important to be aware that when an insurer does not cover geyser repair, the owners are responsible for all geyser maintenance. This means that any wear and tear or corrosion due to a lack of maintenance or negligence will not be covered by the body corporate’s insurance policy.
The geyser limits – according to the insurance policy - and the excess amount payable will affect each owner. Each insurance policy works differently and every permutation has its own effect on the excess payable. Some companies work on a sliding scale depending on the age of the geyser, some offer a maintenance plan, while others offer full geyser cover.
It is the responsibility of the trustees to negotiate the terms and costs in the best interest of all the owners. There is a tendency to go for a slightly higher excess, to stipulate specific conditions with regards to geyser maintenance and to closely manage claims by insurers.
Maintenance is key
Often bodies corporate elect to leave the maintenance component to the owners themselves in an effort to keep the premiums low and manageable for all owners.
One way to ensure good geyser maintenance is for all the trustees to arrange for regular maintenance such as inspecting all geysers for faulty valves and regularly changing anodes.
There are devices and sensors available that can automatically monitor the condition of your geyser and switch off the water supply when necessary.
Talk to your Garrun broker about the best way to manage the geyser insurance for the community scheme where you live.