A trusteeship can often be an overwhelming acquisition for first-time trustees, with a multitude of new policies and procedures to organize and access. Ensure that the correct procedures are being followed with these helpful tips
Check the building policy
Ensure that you have a copy of both the policy wording and schedule. Make a list of the following points to double check;
- Is the sum insured as you have been advised?
- Is the policy a specific sectional title policy?
- Does the policy provide for burst pipes and burst geysers?
- Has trustee indemnity cover been included? This is either a separate section or an extension of liability cover.
- How much fidelity cover is provided?
Check fidelity cover requirements
Check if there has been a body corporate decision on the amount of fidelity cover required, if any. This is the most over-looked insurance aspect and something that should be dealt with immediately. Trustees are required to ensure that the owners make a decision on the amount of fidelity cover required.
Take a look at the body corporate rules in respect of excess, i.e. who pays the excess under which circumstances. Make sure that brokers and insurers structure excesses in a way that accommodates this rule. Excesses “per unit per claim” are not advisable. Make sure your policy reflects excesses “per event” so that apportionment of excesses in multiple claim scenarios does not become over-complicated.
Request a claims history
Obtaining a claims history report from the insurer will reveal the true history. Are the trustees aware of each and every claim submitted? Check the trend and ratios, and have the insurance advisor provide thorough explanations on the claims history.
Take all reasonable precautions around common
Ensure that a consultation with a safety expert has organized to audit the common property for fire and safety requirements. The inspection can cover safety standards in respect of national building regulations being met, e.g. handrails are where they should be, braai area chimneys are up to standard, swimming pools properly enclosed, etc.
Have all owners concur with the sum incurred
Ensure that all owners have a copy of the latest schedule of replacement values and that the owner’s acceptance of the schedule of replacement values has been recorded at a general meeting. The rights to increase the amount of insurance for units where large alterations or improvements have been undertaken should be made clear to the owners of the property.