On Friday 24 March 2017, an industrial warehouse in Rossburgh (Durban) caught fire and burned for over three days. Owing to the nature of the warehouse contents, its location (Durban South industrial basin) and strong prevailing winds, a massive black cloud of smoke quickly spread across the city of Durban. The smoke was quite a spectacle and news of it spread across social media quickly. Once the fire was brought under control and the cloud had passed, it became apparent that the cloud – like a giant slug – left a trail of pollution in its wake. Much of the city over which the cloud had moved was found coated in a layer of greasy dirt including buildings, vehicles and even gardens.

The affected property owners are now asking the unavoidable question: Will their building insurance policy cover the necessary cleaning expenses of their property following the contamination by the cloud of smoke? In short, most property insurance policies will not provide cover to the property owners in such a case.

The property or building insurance policy provides cover against physical damage to the insured property. Damage can be defined as – ‘physical harm that impairs the value, usefulness, or normal function of something’. Therefore, in order for a property insurance policy to respond to a claim the insured property must have suffered physical damage.

The question is: Did the resultant smoke pollution damaged the insured property? No, it did not.

The pollution only dirtied the property which is something that can be reasonably expected in an urban environment, although not quite as much as this smoke cloud caused. Unless the property owner is able to prove to their insurer that their property suffered physical damage, there is no claim against the property insurance policy.

In addition, most property insurance policies exclude cover for events such as seepage, oxidation, corrosion, contamination and pollution. On account of this, the pollution suffered as a result of the smoke cloud is not be covered under such a policy.

The unfortunate reality for most property owners is that the cleaning expenses they will incur will not be recoverable from their building insurance policy. If some property owners believe their property suffered physical damage, our advice is to employ the services of a qualified contractor to assess the property and provide a written report that confirms the cause and nature of the damage. This must presented to their insurers as a potential claim for their consideration.

Author:  Bruce Gibson, Addsure

Contact Addsure – The Leaders in Sectional Title Insurance – for fit and proper advice from advisors who understand Sectional Title. Contact us in Johannesburg (011) 704-3858; Durban (031) 459-1795; Cape Town (021) 551-5069

Subrogation is “the substitution of one person or group by another in respect of a debt or insurance claim, accompanied by the transfer of any associated rights and duties.” It is a term that is not familiar to vast majority of policy holders or people outside of the insurance industry.

If you have an insurance claim, it is important to understand that where there is any chance to recover costs from another party, your insurer use the right of subrogation in the process to recover some of their costs.

Subrogation is the right of the insurer to pursue legal action against a third party that caused an insured loss to the insured party. The intention is to recover the amount of the claim paid to the insured client for the loss.

The opposite is also true where a third party’s insurance company may exercise their right against you or where you are found legally liable for the loss suffered by their client. At this point it becomes a liability claim. A third-party liability claim arises after an incident between two vehicles and a property owner’s liability claim arises in the case of a property-owning entity.

It is best to claim for your own damages via your own insurer in the case of an accident and then allow them to attempt a recovery afterwards. Regardless of the circumstances of an event or incident where damages and resultant financial loss occurs, it is best to leave it to your insurer to address the merits of recovery. Remember that liability cannot be admitted nor can it be assumed. Your insurer should always act in the best interests of their client, whether or not they elect to pursue or defend actions on your behalf. The moment you claim from your insurance policy, your rights of recovery are handed over to your insurers.

Author:  Brian Addison, Addsure

Contact Addsure – The Leaders in Sectional Title Insurance – for fit and proper advice from advisors who understand Sectional Title. Contact us in Johannesburg (011) 704-3858; Durban (031) 459-1795; Cape Town (021) 551-5069

As a property owner, it is important to have a reasonable awareness of the condition of your property at all times. Being aware is essential to ensure that potentially damaging situations are dealt with and averted before an incidence of damage occurs. Insurers will often reject a claim if the incident of damage is found to be a foreseeable occurrence.

We also advise property owners to acquire a degree of knowledge and awareness of the condition of the neighbouring properties. There are a number of things that can cause damage to your property where the cause of the damage originates from a neighbouring property. Many of these are avoidable and some may not be covered in terms of your property insurance.

Trees

Trees located close to the boundary may present a danger of falling onto your property or tree roots growing under the boundary may damage buildings or other property. It is important for property owners to keep an eye on this to ensure trees are properly maintained by their neighbours so as to avoid damage being caused. While removal of trees in danger of falling may be covered, damage caused by tree roots is not.

Construction

Non-standard construction by a neighbour may result in an increased risk to your property. Where a neighbour erects a non-standard construction item such as a thatch lapa, careful consideration must be given to the proximity of this structure to your property. Specific rules apply to the location of a lapa in relation to other structures to avoid transfer of risk. If your unit is located downwind from the lapa, the risk of fire increases significantly. Who can forget the damage caused by the spread of fire at Cape St Francis in November 2012? That fire spread from property to property, rapidly destroying property to the value of millions of rands in only a few hours.

On occasion, existing properties are demolished to make way for bigger, better structures. If a neigbouring property is expanded from a one or two-storey house into a multi-storey building, it may present a number of potential problems through the various stages.

The most frequent cause for concern is undoubtedly where neighbouring properties are situated alongside each other but at different ground levels. Boundary walls can collapse onto neighbouring properties causing significant amounts of damage. It is important to be aware of what your neighbour is doing on the other side of the wall. A common occurrence is an overloaded boundary wall by unintentionally turning it into a retaining wall when it is not designed or built to fulfill this function. If your neighbour creates such a situation and then the wall collapses onto and damages your property, there is unlikely to be insurance cover for either of the properties. Reinstatement of your damaged property will be for your own account and recovery of these expenses may prove exceedingly difficult.

Responsible property owners care for and maintain their property in a manner befitting his investment. It is also wise to look beyond your own property alone to ensure protection of your investment.

Author:  Bruce Gibson, Addsure

Contact Addsure – The Leaders in Sectional Title Insurance – for fit and proper advice from advisors who understand Sectional Title. Contact us in Johannesburg (011) 704-3858; Durban (031) 459-1795; Cape Town (021) 551-5069

When an insurance policy is purchased the property owner (insured) enters into a legally binding contract with the insurer to acquire indemnification against financial loss. This is subject to the relevant policy terms and conditions.

There are two documents that represent the contract:

1. The policy wording which comprises most of the terms and conditions of the contract.
2. The policy schedule that contains specific detail related to the insured as well as some of the more flexible terms and conditions.

When we refer to the insured, we are including all parties covered by their insurance. In a sectional title environment, this includes all members of the scheme and not just the trustees who are appointed to represent the scheme and its members.

All property insurance policy wordings include a general condition relating to disclosure. This reiterates the insured’s responsibility to make full disclosure to the insurer upon application. This disclosure relates to elements such as the current state of the property in question as well as any know faults, defects or characteristics of the property that may adversely affect the risk profile. In addition, the insured should also declare the existing insurance history of the relevant property including underwriting restrictions imposed, claims paid, claims rejected and significant damage not claimed for.

While the insurer expects full disclosure, the policy wordings will state that the insured must disclose all facts and circumstances that they are reasonably expected to be aware of. A property owner who simply ignores problematic issues while reasonably aware of it cannot plead ignorance when making his declaration to the insurer. This is why it is so important that all body corporate members notify trustees of all problems concerning their sections and exclusive use areas.

Where an incomplete disclosure is made to the insurer the insurance cover may be compromised but the insurer may also reject future claims. Where it is proven that a declaration was intentionally falsified or information was held back to secure more favourable insurance terms, some insurers reserve the right to void the insurance policy and refund all premiums. This will render the insurance contract as if it had never existed at all.

While some forms of insurance are quite simple and require relatively basic or standard forms of declaration, others are more complex and clients would do well to seek professional assistance. Communal property insurance is one such form of insurance where the appointment of a qualified broker goes a long way towards protecting the interests of the insured. Such a representative will be knowledgeable about the insurers and their requirements, and will provide adequate advice to the client to ensure full disclosure is made correctly and timeously.

Author:  Bruce Gibson, Addsure

Contact Addsure – The Leaders in Sectional Title Insurance – for fit and proper advice from advisors who understand Sectional Title. Contact us in Johannesburg (011) 704-3858; Durban (031) 459-1795; Cape Town (021) 551-5069