Insurance
Valuations
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
If you have been escalating your sum insured by a flat rate of 10% year after year, it is very likely that your buildings are overinsured 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
Read more: 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.
Read more: How we assess a building’s replacement cost
Owner-installed unit upgrades may include building extensions, enclosed patios, superior internal finishes, air conditioning, swimming pools, lapas, security features etc. On special request and at an additional cost, Mirfin will inspect and asses your unit upgrades, provided that such request is received at least 48 hours in advance and access to the unit is warranted when the valuer is on site.
(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.)
Read more: How to insure owner-installed upgrades in sectional title units
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
- Sign in to the Dashboard.
- Select the relevant property from the “My Portfolio” tab.
- Go to the “Insurance” tab.
- View the amount displayed under “Escalated Value as at Today”.
- Click the “View Escalation” link to download a live valuation update in PDF format.
- Sign in to the Dashboard.
- View the insurance status of all your buildings in the “Insurance Status” column, OR
- Select a property from the “My Portfolio” tab and Go to the “Insurance” tab.
The insurance status is based on a comparison between the escalated insurance value and the current sum insured. The current SI must be input by the user.
Yes, a reminder will be automatically emailed to you shortly before the next valuation is due again.
Estimating the replacement cost of a “heritage” building on the assumption that the building will be reinstated using historically correct building materials and artisanship (“old for old”) requires specialised input from the relevant experts. This tends to be a tedious and and costly process and can easily amount to a fee of more than 10 times that of a valuation done on the assumption of reinstating the building “old for new”.
Insuring a building on the basis of “old for old” will also have a substantial impact on the payable premium as the building’s replacement cost increases two- or threefold.
We encourage our clients to submit any queries by email or via the “Lodge a query” link provided in our survey reports so that all concerns may be addressed in a proper manner and at no additional cost.
Should an in-person consultation with one of our valuers be required, the valuer will contact you to schedule an appointment. In this case, a fee of R950 per hour will be charged, excl. VAT and call-out.