Can a unit owner increase the value of his unit?
The Sectional Titles Act 95 of 1986 (‘the Act’) – specifically Section 37- sets out the functions of the body corporate which includes their duty to ‘insure the building or buildings and keep it or them insured to the replacement value thereof against fire and such other risks as may be prescribed’.
Sectional title schemes are therefore insured as a whole. Insurance is specifically dealt with by Prescribed Management Rule 29. This rule details what must be insured -the buildings and common property, what risks must be insured against and also that the buildings must be insured for the replacement value of the buildings and all improvements to common property.
It further explains that any owner may at any time increase the replacement value as specified in the insurance policy in respect of his unit: Provided that such owner shall be liable for payment of the additional insurance premium.
A unit owner may have renovated or altered his unit therefore increasing the value of such a unit. By increasing the unit’s sum insured the individual unit owner ensures that his unit is adequately insured for its replacement value thereby preventing the application of average to his particular unit.
For all your Body Corporate , Commercial, Corporate and Domestic Building Insurance, Contact us at I&DRS on +27 11 484 9401
Courtesy of CIA newsletter 2016 May 05