Most community scheme associations insure some or all the buildings in the scheme and for their movable assets. In addition they must all have fidelity insurance cover and many take out public liability and other forms of insurance.
Because it is the association, rather than its members, that places this insurance, it is only the association that can start the process of making a claim against the insurer.
There are various situations in which members individually or as a minority group may feel that the association should take action under an insurance policy, but they are unable to get it to do so.
In terms of section 39 (1) (b) of the CSOS Act, an application may be for:
“an order requiring the association to take action under an insurance policy to recover an amount”
Where a group of owners feel that the association does have a good claim against its insurer, but the scheme executives disagree, saying that they don’t want to throw good money after bad, those owners may decide to make an application to the CSOS for an order obliging the association to take all reasonable steps required to enforce its rights against the insurer.
An individual owner may feel that the association’s insurer has unreasonably applied an “excess” or “first amount” provision in the policy and want the association to take action to oblige the insurer to pay out the full amount of the claim.
An example of the type of order the CSOS could give is:
The Naboomspruit Hills Home Owners Association must, on or before [insert date], take action against National Fire Insurance Company under insurance policy number AXD1324/2015 to recover the costs of fire damage repairs to its clubhouse.
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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