The true price of a cheap insurance valuation
Every three years, when the mandatory insurance valuation is due for bodies corporate, trustees and managing agents set out to collect and compare quotations from different service providers. Some trustees seek to make it a painless exercise by appointing the valuer recommended by the managing agent, others appoint the valuer offering the cheapest quote without considering any other factors.
Why not choose the cheapest valuer?
Unfortunately, the Sectional Title Act offers no guidance as to the requirements a valuations provider must fulfil and this leaves the trustees to decide if they are going to choose the cheapest valuer or the one with the best professional reputation and service.
This unregulated environment invites all kinds of self-proclaimed “valuation specialists” to under-bid each other for the body corporate’s approval, with trustees being unaware of the potentially disastrous consequences to which they could expose not only the body corporate but also themselves.
The price you pay for the cheapest quote
Many trustees are unaware of the consequences of an under-insured body corporate. If the valuer’s recommendation was insufficient and the body corporate found themselves inadequately insured at claim stage, the trustees will only have recourse if the valuer holds sufficient professional indemnity insurance.
So, what happens if the valuer does not have professional indemnity insurance (or not enough)? If the valuer is not adequately – or not at all – insured to cover the shortfall of the claim in question, the trustees will be legally liable for this shortfall in their personal capacity.
That’s right, the body corporate can take full recourse on the trustees on the grounds that they failed in their fiduciary duty to ensure sufficient buildings insurance for the scheme.
To make matters worse, the trustees’ liability insurance will not protect them if they are found to have acted negligently.
For this reason, it is vital that trustees ask themselves if they are really doing themselves and their co-owners a favour by only considering the short-term cost and selecting the cheapest valuation in an attempt to save the body corporate a few hundred Rands
SPECIAL OFFER:
If you would like to appoint Mirfin for your next valuation but find that we are a few Rands more expensive than another provider’s quote – this may be because we charge VAT as a Pty Ltd – we will match that quote given that it is for the same service and specifics.
Send price match requests to info@mirfin.co.za the competing quote.
