INSURANCE

Owners in any community schemes should be aware of and ensure that their scheme executives have placed the necessary insurance cover required by the CSOS Act and any other legislation governing their scheme with a reputable insurer who is well versed in the legislated insurance requirements of a community scheme.

Such insurance cover would include the legislated Fidelity Cover required for scheme funds to be protected where the CSOS regulations set out the minimum requirements for such cover for all community schemes. The cover must insure the scheme against the risk of loss of money belonging to the community scheme through any act of theft or fraud perpetrated by any person who has access to, or control over, the scheme’s money. The CSOS regulation 15(1) state that a fidelity insurance policy must pay out within “a reasonable time”, and a pay-out must not be conditional on legal action being taken against the insured person.

A sectional title body corporate has a statutory obligation in terms of the Sectional Titles Schemes Management Act to insure all the buildings and other improvements in a scheme against fire damage and to take out various other types of insurance. If there is an insured event at the sectional title scheme, the BC must make a claim against its insurers on behalf of the owner.

The governance documents of Homeowner Associations, and other types of community scheme will usually oblige the Association to take out insurance for certain events and to cover any damage caused to the common property areas or buildings owned by the scheme.

An order from the CSOS could be sought by an owner if the scheme executives do not put the required insurance in place as legislated, using the prayers for relief and the CSOS dispute resolution process provided for in the CSOS Act.