A sectional title insurance valuation refers to the assessment conducted on a sectional title property to determine its insured value, which is the same as the replacement cost.

For trustees and managing agents of a body corporate, this valuation ensures adequate insurance coverage for the entire property, common areas, and structures under the body corporate's responsibility. It's crucial for protecting the collective interests of all sectional title property owners within the scheme.

For sectional title property owners, this valuation safeguards their investment by accurately determining the insurance coverage required for their specific unit within the scheme. It assures them that in case of any unforeseen loss or damage they are adequately insured based on the property's current replacement cost.

Thus, the sectional title insurance valuation is pivotal for ensuring that all parties involved are sufficiently covered against potential risks or liabilities.

Learn more about our offers:
Body corporate valuations
Building Insurance Valuations

Read more:
Trustee liability in the event of underinsurance
Market value and replacement cost – not the same thing!
Why it is wrong to insure the market value of your house

The appointed trustees have the fiduciary duty to ensure that the body corporate is adequately insured, bearing in mind that claims are subject to averaging by the insurer if the client is found to be underinsured.

For example, when the body corporate is insured for only 80% of its true replacement cost, based on bad advice received from the appointed valuer, a claim filed for, say, R2 000 000 is likely to be averaged. This means that the claim payout will be reduced by 20%, leaving the trustees personally liable for the resultant R400 000 loss suffered by the affected homeowners.

The body corporate’s trustee liability cover does not protect the trustees if they are proven to have acted in gross negligence by appointing the valuer purely on the merit of cost and not qualification.

In this case, the trustees may institute action against the valuer, but might not stand to gain much in case the valuer does not have adequate professional indemnity cover.

The difference between valuers’ fees is usually negligible, so why put yourself at risk for the sake of saving the body corporate a few rand?

Read more:

Trustees made to pay out of their own pocket
Trustee liability in the event of underinsurance

If your body corporate has been escalating the sum insured by a flat rate of 10% year after year, it is very likely that your buildings are over insured by 20, 30, or even 50%. A professional insurance valuation can pay for itself within a few months by bringing your sum insured down to its true level.

Read more:

How to save insurance costs without losing cover
Escalation of Buildings Insurance

Our standard procedure for sectional title valuations is to physically measure up and quantify all common property items and assess the replacement cost of the owned sections in accordance with the latest approved sectional plan obtained from the Surveyor-General’s office and in accordance with the standard of workmanship and finishes observed by our valuer on site.

On special request and at an additional cost, Mirfin will inspect and assess your unit upgrades. Owner-installed unit upgrades may include:

• building extensions,
• enclosed patios,
• superior internal finishes,
• air conditioning,
• swimming pools,
• lapas,
• security features
• etc.

Since it is logistically near impossible for a valuer to arrange access to and inspect every unit in a complex, the onus is normally on the individual owners to report to the trustees the replacement cost of upgrades to their units which they wish to be insured additionally and for their own account.

Should an in-person consultation with one of our valuers be required, the valuer will contact you to schedule an appointment. In this case, an additional hourly rate will be charged.

Get a quote

Read more:

How we assess a building’s replacement cost
How to insure owner-installed upgrades in sectional title units

Prior to making alterations to their owned section, owners are advised to follow these four steps to avoid frustration when lodging an insurance claim or selling their unit:

• Submit proposed buildings plans to the body corporate for approval.
• Obtain approval from the municipality.
• Ensure that construction work is done according to the approved plans.
• Appoint a land surveyor to draft an amended sectional plan for approval by the Surveyor-General.

Keeping the sectional plans up to date at all times is beneficial to the body corporate and individual owners alike and, besides being adequately covered, ensures that every owner is apportioned the correct levies.

Read more: Why it is critical to keep your sectional plans up to date

In accordance with our privacy policy, no information pertaining to our clients and their valuation reports shall be divulged by Mirfin to third parties. Any third parties seeking information or a copy of the valuation report shall be referred to the authorised valuation holder.

Get a quote

If the actual building structures deviate from what is depicted on the latest approved sectional plan, it must be assumed that the alterations have not been approved by the town council and are therefore illegal and possibly uninsurable. We recommend consulting your insurance broker about the cover available for your specific alterations in the event of a claim.

Read more: How to insure owner-installed upgrades in sectional title units

Yes, this is possible, however, the valuer shall neither be held liable for any corrections required subsequently, nor for any financial loss resulting from a non-conventional valuation.

The town council initially approves the proposed building plans, but a land surveyor must verify that the alterations were indeed made in accordance with the approved plans and draft an amended sectional plan for approval by the Surveyor-General. Once the sectional plan is approved, the alterations are deemed to be lawful and eligible for full insurance cover.

Insuring non-approved alterations may possibly expose the body corporate to underinsurance and the trustees to being held personally liable in the event of a claim. We therefore recommend consulting the insurer about the extent of cover provided while the body corporate waits for the amended sectional plan to be drafted and approved.

Read more:
Why it is critical to keep your sectional plans up to date
Trustees made to pay out of their own pocket
Trustee liability in the event of underinsurance

Many service providers proclaim to specialise in assessing community schemes but without having the necessary pre-requisites:

• Professional Indemnity cover for 10% of the total replacement value, but not less than R20 million (Learn why)
• Access to the latest technological facilities
• Valuation includes a detailed breakdown of replacement costs
• Valuation includes a schedule of replacement values per each unit
• Annual valuation updates between 3-yearly valuations
• Commended by insurers, brokers and property managers
• Positive online reviews

The turnaround time depends on the size of the project but, in general, our property/buildings valuation report will be delivered to you by email within 4 - 7 working days from the date of inspection.

The duration of the actual survey depends on the scope of assets to be recorded but usually takes about 2 - 3 hours for a sectional scheme unit. On average, the survey report is completed within 10 -15 working days from the survey date.

Read more: Contents Valuations - How it’s done

While most flat or a sectional scheme unit contents can be replaced “off the shelf” and are easily valued, some assets, like jewellery, artwork, Persian carpets, and collections are unique and irreplaceable. In these cases, the surveyor’s task is to provide proof of ownership by capturing valuables and collectibles on the survey report, either with a client-agreed value or with a “zero” value until the client submits the desired insurance value.

The client may obtain an expert opinion from a jeweller, antiques dealer, auctioneer etc. however, in most cases the true value of unique assets can only be determined through willing-seller-willing-buyer transactions such as at public auctions.

Beware: Some service providers claim to be specialists in valuing of all types of valuables and collectibles because the client has no way of knowing that they merely guessed the value. The fact is that not even a seasoned auctioneer is able to predict what value an item will attain on auction.

Read more: Contents Valuations - How it’s done

Any valuer can have a bad day and make an error that may cause your building to be underinsured. Are you prepared to assume personal liability for following the valuer’s flawed insurance recommendation? Of course not! You need to be able to hold your service provider accountable in the event of a shortfall in claim pay-out. But if your valuer is not adequately insured, the liability will fall back on you.
Don’t select your valuer purely on the merit of price, rather ensure that they can be held accountable when something goes wrong!

Read More: Trustee liability in the event of underinsurance

In a sectional title scheme, the body corporate's insurance covers the buildings' structure, including shared areas and common property. However the extent of this coverage is not prescribed by law, so it's vital to check the details outlined in your specific sectional title scheme's rules and conduct a careful review of the body corporate's insurance policy.

It is also important to note that the body corporate's insurance coverage may vary depending on whether you own a flat or a house within the scheme.

As a flat owner within the scheme, you are likely to be responsible for insuring the contents and improvements of your unit. This includes your personal belongings, the interior fixtures that customize your space, and any changes you have made since the construction. To protect these items, you should get personal insurance (also known as a householders' policy or contents insurance), as they may not be covered by the body corporate's insurance policy.

As a house owner, you may face different insurance considerations. The body corporate's sectional title insurance policy mainly covers the common property and shared areas within the scheme, but it may not cover the individual houses or structures owned by the residents. Therefore, you may need separate insurance for your specific coverage needs.

Whether you are a flat or a house owner, you should always verify your insurance policies to understand their scope and ensure appropriate coverage for your property.

Read more: Is the body corporate responsible for insuring its members’ unit upgrades?