Sectional title schemes insurance essentials | Cover, maintenance and claims explained
26 August 2026 | TVDM Consultants / Addsure / Decapolis Realty Solutions
Sectional title insurance can appear straightforward, the body corporate insures the building, while owners insure their personal belongings. In practice, however, claims often become complicated when water enters a section, a roof leaks, a pipe deteriorates or storm damage exposes an existing defect.
The central questions are usually the same:
What caused the damage?
Was the event sudden and unforeseen, or did it develop over time?
Which part of the property was damaged?
Who is responsible for repairing it?
Does the policy respond to the cause, the resulting damage, or both?
Understanding these distinctions before a loss occurs can help trustees, managing agents and owners manage expectations, maintain the property appropriately and present claims more effectively.
The division of insurance responsibilities
The body corporate is responsible for arranging insurance for the buildings and common property, as required by the Sectional Titles Schemes Management Act 8 of 2011 (“STSMA”) and the prescribed management rules (“PMRs”), found in Annexure 1 of the Regulations in the STSMA. The policy generally includes the permanent building fabric within sections, subject to its terms, conditions and exclusions.
Owners should separately insure their household contents, personal possessions and personal liability. Furniture, clothing, appliances and other movable belongings do not ordinarily form part of the body corporate’s building policy.
The difficulty arises where one incident affects several layers of property. Water escaping from a pipe may damage the pipe itself, the wall in which it is situated, fixed cupboards, ceilings, flooring and an owner’s furniture. These items may not all be treated in the same way. Responsibility and cover depend on the cause of the damage, the location and nature of the affected property, the applicable rules and the wording of the policies involved.
The cause of the damage is critical
Insurance is intended primarily for defined accidental events, not for the inevitable deterioration of property. This is why the distinction between sudden damage and wear and tear is so important.
Water-damage claims can usually be understood through three broad scenarios.
1. A sudden and unforeseen burst pipe
A pipe may fail unexpectedly after operating normally, perhaps because of a sudden pressure event or freezing conditions. If the event falls within the policy wording, the insurer may cover the reasonable costs associated with locating and repairing the insured damage and reinstating affected building finishes, less the applicable excess.
The precise extent of cover depends on the policy. It is therefore unwise to assume that every item connected to a burst pipe will automatically be paid.
2. A pipe that has deteriorated and leaked over time
A corroded pipe, pinhole leak or gradual seepage is generally a wear-and-tear issue. Typical warning signs include damp, mould, a persistent smell, staining behind cupboards or a wet patch that has developed slowly.
The deteriorated pipe and the work required to expose, replace and close it up may not be insured. Gradual deterioration, damp and wear and tear are commonly excluded under sectional title building policies.
This is not simply a question of whether an owner could physically “maintain a pipe inside a wall”. The relevant insurance question is whether the damage resulted from an insured event or from deterioration over time.
3. A deteriorated pipe that suddenly collapses
This is the mixed scenario and often the source of disagreement. An old or corroded pipe may suddenly give way, releasing a large volume of water at once.
The insurer may distinguish between:
the failed pipe and associated repair work, which arose from wear and tear, and
the sudden resulting water damage to insured building elements, which may be considered separately.
In other words, the policy might not pay to replace the deteriorated pipe, but it may respond to some of the sudden resulting damage caused by the escape of water. A detailed plumber’s report, clear photographs and an accurate timeline can be decisive.
What is resultant damage?
Resultant damage is the secondary damage flowing from an initial event. If water suddenly escapes from a pipe and damages a ceiling, fixed cupboards or flooring, those damaged items are the result of the original failure.
However, resultant damage is not automatically covered merely because it followed another event. The insurer will consider the proximate, or dominant, cause of the loss and the policy wording. If the real cause was gradual deterioration, defective construction or a long-standing maintenance problem, the claim may be limited or declined.
The same principle applies to roofs. Hail may break roof tiles, which would ordinarily point towards storm damage. But if rain entered because waterproofing had already failed, ridging was cracked or flashings and membranes had deteriorated, the insurer may conclude that the underlying defect, not the storm, was the effective cause of the loss.
Maintenance protects the scheme’s insurability
Maintenance and insurance should not be managed as separate subjects. Known defects can affect whether a claim is paid and, where problems remain unresolved, may affect the terms on which an insurer is willing to continue providing cover.
Trustees should pay particular attention to:
roof tiles, ridging, waterproofing, flashings and membranes;
gutters, downpipes, drains, grids and stormwater capacity;
recurring damp, leaks and water ingress;
ageing or corroded plumbing;
trees that are unstable, damaged or dangerously positioned;
surge protection, earthing and lightning-protection requirements;
roof structures and other elements where structural capacity may be in question, and
retaining walls, including their design, drainage, approvals and supporting engineering records.
Weather patterns and the intensity of rainfall also deserve attention. A drainage system that coped adequately years ago may now be overwhelmed by concentrated downpours. Where flooding repeatedly occurs, the scheme should investigate the cause and consider whether grids, channels, sumps or other drainage measures need to be improved.
When an insurer, engineer or other specialist identifies a risk-reduction measure, the trustees should record it, obtain professional advice where appropriate and address it within a reasonable period. Good records help demonstrate that the scheme has taken its responsibilities seriously.
Insure the building for an adequate replacement value
The body corporate should obtain the prescribed professional replacement-cost valuation at least every three years and review the sum insured annually.
Market value and replacement value are not the same
The insured value needs to allow for the cost of rebuilding the scheme, together with relevant professional fees, demolition, debris removal and other items contemplated in the valuation and policy.
Underinsurance can result in the average clause being applied. If a building is insured for less than its proper replacement value, the insurer may reduce a claim proportionately, even where the loss is only partial.
Professional valuations provide the foundation, but owners should also consider improvements within their sections. Upgraded kitchens, superior flooring, built-in cabinetry and other enhancements may place a section above the standard replacement value allocated to it.
An owner may request an increased amount for their section in accordance with PMR 23 and will ordinarily be responsible for the additional premium. A modest buffer may offer useful comfort, but overinsurance does not allow an owner to profit from a loss: settlement remains limited to the proven insured loss, subject to the policy.
Trustees should not act as the insurer
Trustees and managing agents can help an owner understand that a loss appears unlikely to be covered, but they should be careful not to make the insurer’s decision.
Where an owner wishes to submit a claim, the body corporate should generally allow it to proceed through the proper channel. Trustees can attest to the information supplied, add relevant facts or reservations and ask the broker for guidance. The insurer then assesses the claim under the policy.
This approach is different from “approving” or “rejecting” an owner’s claim. It preserves the owner’s opportunity to obtain a formal decision while ensuring that the insurer receives the body corporate’s version of events.
Claims that are only marginally above the excess require a practical, case-by-case assessment. The likely benefit, administrative cost, claims history and impact on the scheme’s insurance profile may all be relevant. However, owners should not be prevented from claiming merely because trustees would prefer not to submit a loss. A specialist sectional title broker can help the scheme apply a reasonable approach.
How to improve the prospects of a fair claim assessment
When damage occurs, the scheme should:
Take reasonable emergency steps to prevent further loss, without destroying evidence unnecessarily.
Notify the managing agent and broker promptly.
Photograph the source and all affected areas before repairs begin, where safely possible.
Obtain a detailed report identifying the cause, condition of the failed component and nature of the damage.
Keep damaged parts, such as sections of pipe, until the insurer confirms that they may be discarded.
Separate repair costs relating to deterioration from costs relating to sudden resultant damage.
Preserve invoices, quotations, correspondence and maintenance records.
Avoid promising an owner that a claim will be paid before the insurer has assessed it.
The practical takeaway
Sectional title insurance is more than the annual purchase of a policy. Effective protection depends on four connected disciplines:
an adequate sum insured,
a clear understanding of responsibilities,
active risk and maintenance management, and
proper claims handling.
The most important question after a loss is not simply, “Was there water, hail or a collapsed structure?” It is, “What was the true cause of the damage?” That answer will often determine which costs are insured, which remain a maintenance responsibility and whether resultant damage can be considered.
Policy wording differs between insurers and schemes. Trustees, managing agents and owners should therefore seek advice from a specialist sectional title insurance broker whenever the cause, responsibility or extent of cover is uncertain.
This article provides general information and should not be treated as a substitute for advice based on the scheme’s policy wording, circumstances and applicable legal requirements.
This article was prepared with content from a webinar hosted by Sarah Sydenham of TVDM Consultants, together with Mike Addison of Addsure and Tony Dellas of Decapolis Realty Solutions. The webinar explored essential insurance considerations for sectional title schemes.
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