For a newly appointed trustee of a body corporate, it can often feel like walking into a work of utter confusion and over reaching responsibility. Here are a few tips to help you get settled into your role and help you understand how your body corporate is doing when it comes to insurance. 

• First Tip: Claims History 

Ask your current broker or insurer for your claims report. The Trustees should know each and every claim that has been submitted by the body corporate. Have a look at the claims ratio  to see how well your claims are being managed.   See our blog post on understanding your claims ratio.  

• Second Tip: Rebuild Value / Sum Insured of the Buildings 

In terms of sectional title legislation, body corporates must obtain a professional replacement valuation for the body corporate every 3 years. This valuation needs to be carried out by a professional valuator of which there are many in the market. This takes the financial responsibility off of the trustees for the values (sum insured) that the complex is covered for. Find out when & who the last valuation was conducted by. 

• Third Tip: Fire & Safety Requirements 

Your insurance policy is bound by legislation that extends beyond the policy wording of the body corporate insurance policy. The body corporate at all times needs to comply with the NHBRC and fire regulations. Often insurers will send their own surveyor around to ensure that the body corporate complies with the necessary legislation. However if yours doesn’t, then as a trustee I highly recommend you interact with the local fire chief and a safety expert to find out if there are any areas where the body corporate is exposed. Such a person will check that your fire precautions are up to standard and that safety standards of NHBRC are met, e.g. handrails on stairs, swimming pools properly enclosed, adequate fire extinguishers on the premises etc. 

• Fourth Tip – Geysers 

This is one that may surprise many. It is not a requirement in terms of the legislation for a body corporate insurance to insure the geysers. The prescribed management rules clearly outline that a unit owner is supposed to maintain their own hot water installations, but all insurers include geysers in their insurance. Geysers can account for as much as 50% and more of the body corporates claims ratio. If this is something that is affecting your claims ratio, which then increases your premium, you have a few options.

You can choose to increase the excess on the geysers, which then lowers the claims ratio. You could also choose to not insure the geysers at all and insist that all unit owners insure their geysers themselves. Lastly, a way to alleviate geyser claims is to implement a programme to replace the anodes in the geysers or opt for a no anode replacement product that comes with a 10-year guarantee.   

• Fifth Tip – Fidelity Cover 

All body corporates have to have this cover in place, and sadly more often that not it is the most disregarded when it comes to dealing with the financial affairs of a body corporate. Fidelity will cover dishonesty when it comes to the finances of the body corporate. A shifty trustee or managing agent can wipe out a body corporate savings without anyone being any wiser. A fidelity policy insures against this and it is extremely cost effective. 

• Sixth Tip: Communication & Processes to follow are key 

Having information at the unit owners’ fingertips is the best way to ensure that life in the body corporate flows smoothly. When a geyser bursts on Christmas Day, you do not want to be receiving that phone call from the unit owner asking a million questions and demanding results. A one pager detailing the preferred service providers, or an insurance geyser hotline number, step by step instructions on where the invoices should be sent, or claim forms can be downloaded etc are vitally important for all unit owners to have handy. 

For a quote on your body corporate insurance click the link below: https://tinyurl.com/BodyCorporate 

Wishing you the best of luck in your journey of trusteeship at your body corporate.