Published: 10 July 2026
Every year at Annual General Meetings (AGMs) the Body Corporate tables a Summary of Benefits together with the insurance renewal, someone says, "Any questions?", nobody asks any, and everyone approves it. Yet very few Trustees or owners actually know what they're looking at and are unsure what the various headings actually mean or why they are important.
You do not need to understand every technical insurance term to make informed decisions. The purpose of this article is to explain, in plain language, what each section of the Summary of Benefits means and why it matters to your scheme.
You do not need to understand every technical insurance term to make informed decisions. The purpose of this article is to explain, in plain language, what each section of the Summary of Benefits means and why it matters to your scheme.
UNDERSTANDING YOUR BUILDING COVER
Residential Rate per Square Meter
This is the current rate per square meter that the sections are insured for, owners should refer to the schedule of replacement values of the insurance cover for each section that also includes any additional sum insured requested by owners or the bondholder.
The replacement values reflected on the Body Corporate's insurance schedule are based on the values declared to the insurer & approved by the owners at the Annual General Meeting.
However, an owner/bondholder may at any time request that the replacement value specified for his or her section or exclusive use area be increased by providing written notice to the Body Corporate.
Owners should note that any additional premium resulting from the increased value will be for the owner's account.
Why this matters: If the replacement values are too low, the scheme may be underinsured. Trustees should therefore ensure that the insurance valuation is carried out every three years and that owners declare any significant improvements to their sections.
The replacement values reflected on the Body Corporate's insurance schedule are based on the values declared to the insurer & approved by the owners at the Annual General Meeting.
However, an owner/bondholder may at any time request that the replacement value specified for his or her section or exclusive use area be increased by providing written notice to the Body Corporate.
Owners should note that any additional premium resulting from the increased value will be for the owner's account.
Why this matters: If the replacement values are too low, the scheme may be underinsured. Trustees should therefore ensure that the insurance valuation is carried out every three years and that owners declare any significant improvements to their sections.
Replacement value
Is the amount required to rebuild or reinstate a unit and its insured landlords fixtures and fittings at current construction costs following a total loss. It is not the same as the market value or selling price of the property.
Additional Sum insured
This represents the additional insured value requested by an owner or bondholder over and above the standard replacement value of the section.
This may include alterations or upgrades carried out by an owner that do not form part of the standard finishes of the section, such as wooden flooring, alarm systems, gas stoves and solar systems. If these improvements are not declared to the insurer, they may not be covered by the policy.
An owner or bondholder may also request that the replacement value specified for a section or exclusive use area be increased where the standard replacement value is no longer considered adequate.
Owners are responsible for the additional premium payable in respect of any additional cover for upgrades, improvements or increases to the replacement value.
This may include alterations or upgrades carried out by an owner that do not form part of the standard finishes of the section, such as wooden flooring, alarm systems, gas stoves and solar systems. If these improvements are not declared to the insurer, they may not be covered by the policy.
An owner or bondholder may also request that the replacement value specified for a section or exclusive use area be increased where the standard replacement value is no longer considered adequate.
Owners are responsible for the additional premium payable in respect of any additional cover for upgrades, improvements or increases to the replacement value.
Common property
This value covers all the common areas belonging to the Body Corporate/HOA such as the perimeter walls, internal walls, paving, clubhouses, electric fencing, non-motorised gates, as well as signage, fire extinguishers, hose reels, staff quarters, laundries, storage areas etc
Total Property Combined
This is the total sum insured of all the sections together with the common property and includes VAT, demolition and debris removal costs, as well as professional fees.
In terms of the Sectional Titles Schemes Management Act, the Body Corporate is required to obtain an insurance valuation at least every three years and table it at the AGM.
Trustees should compare the insurance valuation with the current Total Buildings Combined sum insured to ensure that the scheme remains adequately insured. It is important to remember that these figures will not necessarily be the same, as the Total Buildings Combined amount also includes additional costs such as VAT, demolition and debris removal, and professional fees that are not reflected in the valuation itself.
In terms of the Sectional Titles Schemes Management Act, the Body Corporate is required to obtain an insurance valuation at least every three years and table it at the AGM.
Trustees should compare the insurance valuation with the current Total Buildings Combined sum insured to ensure that the scheme remains adequately insured. It is important to remember that these figures will not necessarily be the same, as the Total Buildings Combined amount also includes additional costs such as VAT, demolition and debris removal, and professional fees that are not reflected in the valuation itself.
Escalation - 12% & Inflation - 10%
This is a reserve for reinsurance purposes and did you know was implemented after WWII. Following World War II, insurers found that many buildings were significantly underinsured because construction costs had increased dramatically before damaged buildings could be rebuilt. This addition allows for reserve for the insurer.
COVER FOR YOUR SECTION
Geyser limits
Did you Know? Between 60 & 70% of a Body Corporate’s insurance claims are geyser related.
The policy sets out the number of geysers in the scheme and the limits for replacement of a burst geyser relating to the size of the geyser and any excesses payable.
Some Body Corporates add “Geyser excess buy back” to the policy, this applies to replacing of the geyser and covers limited repair costs for thermostats, isolators and any components within a meter of the geyser. What this essentially means is that when a geyser bursts where the Body Corporate has geyser buy back in place, there would be no excess payable by the owner for the replacement or repairs of the geyser.
The policy sets out the number of geysers in the scheme and the limits for replacement of a burst geyser relating to the size of the geyser and any excesses payable.
Some Body Corporates add “Geyser excess buy back” to the policy, this applies to replacing of the geyser and covers limited repair costs for thermostats, isolators and any components within a meter of the geyser. What this essentially means is that when a geyser bursts where the Body Corporate has geyser buy back in place, there would be no excess payable by the owner for the replacement or repairs of the geyser.
Geyser component cover
Geyser component cover is for maintenance or repairs up to a specified limit of the geyser for example a faulty element or thermostat. Always check the policy as some policies do not include maintenance or replacement of geyser components.
Loss of rent and alternative accommodation
The loss of rent and alternative accommodation extension is limited to a maximum of 30% of the unit's replacement sum insured.
This extension applies where a unit becomes wholly or partially uninhabitable as a result of an insured peril, such as fire damage.
If the owner occupies the unit, the policy provides cover for reasonable alternative accommodation, subject to the terms and limits of the policy.
If the unit is let to a tenant, the owner may claim for loss of rental income for the period during which the unit is being reinstated. The claim is generally calculated based on the market-related rental value of the unit, subject to the policy limits
This extension applies where a unit becomes wholly or partially uninhabitable as a result of an insured peril, such as fire damage.
If the owner occupies the unit, the policy provides cover for reasonable alternative accommodation, subject to the terms and limits of the policy.
If the unit is let to a tenant, the owner may claim for loss of rental income for the period during which the unit is being reinstated. The claim is generally calculated based on the market-related rental value of the unit, subject to the policy limits
COVER FOR COMMON PROPERTY
Subsidence & Landslip
Subsidence or landslip allows for limited cover included in the policy and is required by the bondholders. Extended cover can be included but only if the insurer is prepared to quote for this to be covered. However, both these covers exclude active soils such as clay, dolomite, and limestone.
The onus is on the Body Corporate to prove that a policy exclusion as mentioned above is not the cause of the loss and will need to satisfy the insurer that the premium will be sufficient to cover any loss. A geotechnical report may be required by the insurer including a dolomite risk management programme.
The onus is on the Body Corporate to prove that a policy exclusion as mentioned above is not the cause of the loss and will need to satisfy the insurer that the premium will be sufficient to cover any loss. A geotechnical report may be required by the insurer including a dolomite risk management programme.
Specified Business All Risks
Specified Business All Risks provides cover for items that fall outside the definition of the building.
Definition of a Building: A building generally consists of the brickwork, mortar, roof structure and the standard landlord's fixtures and fittings.
Under the main buildings policy, certain items such as gate motors are generally only covered if they are damaged as a result of a specified insured peril, such as a fire or major storm.
Specified Business All Risks extends this cover to valuable Body Corporate assets that are exposed to accidental or sudden loss or damage during normal day-to-day use. Examples include intercom systems, CCTV cameras, computer equipment, access control systems, generators and similar equipment. These items may also be covered for risks such as accidental damage, theft and power surges, subject to the terms, conditions and exclusions of the policy.
Definition of a Building: A building generally consists of the brickwork, mortar, roof structure and the standard landlord's fixtures and fittings.
Under the main buildings policy, certain items such as gate motors are generally only covered if they are damaged as a result of a specified insured peril, such as a fire or major storm.
Specified Business All Risks extends this cover to valuable Body Corporate assets that are exposed to accidental or sudden loss or damage during normal day-to-day use. Examples include intercom systems, CCTV cameras, computer equipment, access control systems, generators and similar equipment. These items may also be covered for risks such as accidental damage, theft and power surges, subject to the terms, conditions and exclusions of the policy.
Machinery Breakdown
This section provides cover for heavy-duty machinery owned by the Body Corporate, such as hoists and lifting machinery, whilst at rest, in operation or in transit, subject to the terms and conditions of the policy. This cover is intended for Body Corporate assets and does not extend to machinery owned by individual owners.
Transformers and mini-substations are generally insured under the common property section of the policy, while generators below a specified value may be included under Machinery Breakdown.
Transformers and mini-substations are generally insured under the common property section of the policy, while generators below a specified value may be included under Machinery Breakdown.
Office Contents
Office contents covers the clubhouse furniture and chairs.
Garden Landscaping
Gardens landscaping does not include pots and the plants. It must be a proven that a landscaped garden was destroyed due to storm damage or fire, hail, snow etc. This covers plants outside of pots, trees, garden edging. Irrigation systems must be identified under business risks as they fall under electronics.
Security Services
Security services, the policy includes a specific amount per event. To make use of this cover the Body Corporate would need to have a peril that causes it to have to appoint a security guard. An example would be when a car drives through the boundary wall and leaves a hole in the wall that needs to be guarded. Be cautious of policies that have a limit specifically for night shifts.
Cleaning and Maintenance Equipment
This cover is for cleaning and maintenance equipment for example polishers for tiled passages. You would be required to prove that you owned the equipment– this cover is more generated for residential flats.
All Building Glass
Some insurance policies limit the amount of cover available for building glass. Hollard, however, provides cover for all building glass, recognising that multiple windows could be damaged during a single insured event, such as a hailstorm.
It is important to note that this section covers accidental breakage of glass. Damage such as chipping, scratching or gradual deterioration of the glass is not covered.
It is important to note that this section covers accidental breakage of glass. Damage such as chipping, scratching or gradual deterioration of the glass is not covered.
Theft of Internal/External fixtures & fittings
To claim for theft of internal or external fixtures the Body Corporate must show forceable entry or exit. If a mattress or blanket is put over the electric fence to gain entrance and the fence is not cut, this is not forceable entry.
Some policies limit the cover. Internal theft without evidence may not claimable. It is advisable to submit a claim for the insurer to advise if they will consider the claim.
Some policies limit the cover. Internal theft without evidence may not claimable. It is advisable to submit a claim for the insurer to advise if they will consider the claim.
Accidental Damage
Accidental Damage provides cover for sudden and unforeseen damage that is not generally covered under any other section of the policy. An example would be an owner accidentally walking through a sliding glass door, causing the glass to shatter.
This section does not cover minor cosmetic damage where the item can still perform its intended function. For example, if a hammer is accidentally dropped into a basin causing it to crack, but the basin can still hold water and remains fully functional, the damage would generally not be claimable. The basin would need to be damaged to the extent that it can no longer perform its intended purpose before a claim would be considered.
Similarly, the popping or "tenting" of tiles caused by normal temperature fluctuations resulting in thermal expansion and contraction is regarded as a maintenance issue and is not covered under this section of the policy.
This section does not cover minor cosmetic damage where the item can still perform its intended function. For example, if a hammer is accidentally dropped into a basin causing it to crack, but the basin can still hold water and remains fully functional, the damage would generally not be claimable. The basin would need to be damaged to the extent that it can no longer perform its intended purpose before a claim would be considered.
Similarly, the popping or "tenting" of tiles caused by normal temperature fluctuations resulting in thermal expansion and contraction is regarded as a maintenance issue and is not covered under this section of the policy.
LIABILITY PROTECTION
Public Liability
Public Liability provides cover for the Body Corporate's or HOA's legal liability where a third party (a member of the public) suffers injury or property damage on the common property as a result of the Body Corporate's negligence.
This cover does not generally extend to claims by owners in their capacity as members of the scheme.
To succeed with a claim, the injured party would generally need to prove that the Trustees or Directors were negligent.
The STSM Act requires a minimum cover of R10mil. The minimum cover in terms of the policy for Hollard is R50mil, the Trustees can increase this, but they may not decrease this minimum as per the Hollard policy. The premium payable for the R50 mil cover is not material.
Why this matters: Public liability claims can be substantial. Trustees should ensure that the level of cover remains appropriate for the size and risk profile of the scheme.
This cover does not generally extend to claims by owners in their capacity as members of the scheme.
To succeed with a claim, the injured party would generally need to prove that the Trustees or Directors were negligent.
The STSM Act requires a minimum cover of R10mil. The minimum cover in terms of the policy for Hollard is R50mil, the Trustees can increase this, but they may not decrease this minimum as per the Hollard policy. The premium payable for the R50 mil cover is not material.
Why this matters: Public liability claims can be substantial. Trustees should ensure that the level of cover remains appropriate for the size and risk profile of the scheme.
Trustees Indemnity
The Trustees’ indemnity covers if a Trustee or Director have an error in omission of making a decision on behalf of the Body Corporate which results in a loss for the owner due to the decision that was made in error. e.g. A Trustee advises the wrong colour to an owner, resulting in the owner claiming for the cost of the paint to repaint the area the correct colour.
Employers Liability
The Body Corporate must be registered for workmen’s compensation, an employee cannot claim against this policy only against workmen’s compensation, this cover is used as a gap cover, in other words any shortfall from workmen’s compensation can be claimed to cover the costs. The COIDA Act took away the right for an employee to sue their employer.
Fidelity Guarantee/Commercial Crime
Fidelity is cover for an employee who has stolen funds or assets from the Body Corporate which is extended to the managing agent. Trustees & managing agent fall under the definition of employee. Hollard extends to managing agent, other insurers do not extend to the managing agent. This cover can also include theft of a Body Corporate or HOA asset.
Automatically part of the Hollard policy is a minimum of R150 000 - Trustees must increase as required by CSOS Act which is calculated as follows, the total value of the scheme's investments and reserve funds at the end of the previous financial year; + 25% of the current financial year's administrative fund budget.
Automatically part of the Hollard policy is a minimum of R150 000 - Trustees must increase as required by CSOS Act which is calculated as follows, the total value of the scheme's investments and reserve funds at the end of the previous financial year; + 25% of the current financial year's administrative fund budget.
ADDITIONAL BENEFITS YOU MAY NOT KNOW ABOUT
Residence Locks and Keys
Residence locks & keys covers for theft, and the keys have been stolen, or the caretaker has lost his keys. This is to replace the locks and keys and includes cover for a lock being broken due to break-in. This cover is for both owners and the Body Corporate.
Mobility Costs
This benefit provides cover where an owner or a member of the owners family residing in the unit suffers a serious bodily injury at the insured premises as a result of an insured event, such as a fire, a violent act of theft, a hold-up or hijacking, and as a result becomes dependent on a self-propelled wheelchair.
The cover provides for reasonable modifications to the residence to accommodate the wheelchair, such as the installation of wheelchair ramps, handrails or similar accessibility improvements, up to the limit specified in the policy.
The cover provides for reasonable modifications to the residence to accommodate the wheelchair, such as the installation of wheelchair ramps, handrails or similar accessibility improvements, up to the limit specified in the policy.
Accommodation for live in domestic employees
This covers for alternative accommodation for domestic employees due to the house not being liveable due to an insured peril such as a fire that has made the unit/ workers quarters uninhabitable. The policy includes cover for alternative accommodation up to a limit as specified in the policy.
Accommodation for Domestic Pets
This covers for alternative accommodation for domestic pets, if the house is not liveable due to an insured peril such as a fire that has made the unit uninhabitable. The policy includes cover for alternative accommodation up to a limit as specified in the policy.
Money
Money is one of the oldest sections in the Sectional Title policy and refers to cheques and safes. This was brought in by insurers as owners used to pay levies in cash.
Although cash is seldom handled today, this section provides cover for injuries sustained by estate managers, caretakers or Trustees who are assaulted while carrying out Body Corporate duties.
Although cash is seldom handled today, this section provides cover for injuries sustained by estate managers, caretakers or Trustees who are assaulted while carrying out Body Corporate duties.
Claims Preparation Costs
Claims preparation costs is a reserve for the insurer. If an assessor, or loss adjustor or engineer is required there is no cost to the Body Corporate, therefore if a professional is used then this section pays for that professional up to a limit.
Loss of Water
Loss of water due to a leaking pipe on common property or in the unit can be claimed if you can show that you have had loss of water by using a specific formula required by the insurer.
Sasria Cover
The South African Special Risks Insurance Association (SASRIA) brought this in due to the riots. The government at the time felt that the riots or political unrest were causing damage to state owned property, this has subsequently been extended to private property. Schemes are rated according to residential, commercial, office, manufacturing etc.
Final Thoughts
The Summary of Benefits is far more than a schedule of insurance figures. It provides Trustees and owners with an overview of the protection available to the scheme and highlights areas that require annual review.
Understanding what each section means enables Trustees & Owners to make informed decisions, ask the right questions at the AGM and ensure that the scheme remains adequately protected.
Understanding what each section means enables Trustees & Owners to make informed decisions, ask the right questions at the AGM and ensure that the scheme remains adequately protected.
Before approving the insurance renewal at the AGM, Trustees should ask:
- Have the replacement values been updated?
- Have owners declared any improvements that require additional cover?
- Have all Body Corporate assets been added to the policy?
- Have all the all-risks items been adequately covered in the policy?
- Is the Fidelity Guarantee sufficient to meet the CSOS requirement?
- Are the limits and excesses still appropriate for the scheme?
- Have any new Body Corporate assets been purchased during the year that need to be added to the policy?
Related Articles
If you found this article helpful, you may also be interested in:
- Body Corporate Insurance – What Every Owner Should Know – Understand what is covered by the Body Corporate's insurance policy, what owners should insure themselves and when additional insurance may be required.
- Who Pays the Excess – Common Insurance Disputes in Section Title schemes – Understand the responsibility for paying and excess and the numerous factors to take into account when determining responsibility.
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