Requiring an association to take out or increase the amount of its insurance cover
In terms of section 39 (1) (a) of the CSOS Act, an application may be for:
“an order requiring the association to take out insurance or to increase the amount of insurance”
- 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. When an insured events occurs, it has an obligation to make a claim against its insurers.
- The governance documents of home owners associations, share block schemes and other types of community scheme will usually oblige their associations to take out insurance.
The executive committee of an association that is obliged to take out insurance cover and keep it in force may negligently or intentionally allow the cover to lapse, exposing the owners to risk. An owner who is unable to get the executives to take out the required insurance may apply to the CSOS for an order obliging the executives to do so. An owner may consider that the amount of some insurance cover taken out by the association is unreasonably low, leaving owners partially uncovered in the event of a claim. An owner who has evidence that property is not insured for its full replacement value, for example, could apply for an order compelling the executive committee to increase the amount of the association’s insurance to that full value.
An example of the type of order the CSOS could give is: 1. That the [here describe the association, e.g. the Body Corporate of the Mtwetwini Game Reserve,] must, within a period of [here insert period] from the date of this order, do all things necessary to arrange insurance cover for [here describe the buildings, property or interest to be insured, e.g. the houses and other buildings and improvements in the scheme] for [here insert the extent of the insurance either in money terms or in general terms, e.g.? go away and I are in the follow their full replacement value] against the risk of [here insert a description of the risk, e.g. damage by fire and the other risks prescribed under the Sectional Titles Schemes Management Act of 2011]. 2. The [here describe the scheme executives, e.g. the trustees] must within a further [here insert a reasonable period, e.g. 7 days] give [here describe the members, e.g. all owners] written notification confirming [here describe what the members need to know, e.g. the replacement values for which their houses are insured] under the insurance policy. 3. This order takes effect immediately.
If you would like to see the whole of the Community Schemes Ombud Service Act, 9 of 2011, including the full text of chapter 3 that covers applications, you can access this from Paddocks’ resource library.
Do you have concerns about your matter, need assistance completing your application, or want a sectional title Consultant to review your application before submission? Have a look at the Paddocks’ Consulting page.
For general help on the CSOS, including the special meanings of the words and phrases “association”, “common area”, “dispute”, “executive committee”, “owner”, and “scheme governance documentation” see the CSOS Information page.
Needing other assistance? Have a look at our Paddocks assistance page, which includes the helpful application guide explanation, for more information.
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