By Insure City Insurance Brokers (Pty) Ltd

Purchasing your first property in a sectional title scheme is an exciting milestone.

However, one of the most common and least understood mistakes new owners make is unintentionally ending up with dual insurance. While it may seem harmless at first, dual insurance can lead to unnecessary costs, administrative complications, and delayed claims.

Understanding how dual insurance occurs and why it offers no benefit is essential for every sectional title owner.

What Is Dual Insurance?

Dual insurance occurs when the same asset or risk is insured with two or more insurance companies at the same time.

In the South African short-term insurance environment, while insurers may unknowingly accept premiums for the same asset, the law prevents an insured entity from benefiting twice from the same risk. In practical terms, you cannot legally double-insure a building and expect double cover.

How Dual Insurance Happens In Sectional Title Schemes

In sectional title schemes, the Body Corporate is legally required to insure the building structure, including walls, roofs, and common property. The cost of this insurance is recovered from owners through their monthly levies.

Dual insurance typically arises when:

• A buyer is not informed that the Body Corporate already insures the building, or
• A separate building insurance policy is sold to the owner when purchasing the unit.

The result is that the same sectional title unit is insured twice for the same structural risks, once via the levy and once through a private insurance policy.

How Insurers Deal With Dual Insurance

When it becomes evident that more than one insurer is covering the same asset, insurers are required to apply the principle of contribution. This means that the Insurance companies involved will have to calculate premiums collected vs. claims paid, divide the risk equally, and refund the client any premiums on a 50/50 basis. These calculations and claims history processing are extremely complicated and require many resources and man-hours to resolve.  Dual insurance causes unnecessary frustration and complications at the claims stage that an owner should not have to deal with in their hour of need. 

Why Dual Insurance Offers No Benefit

There is no financial or practical advantage to insuring the same risk with more than one insurer. You cannot claim twice for the same loss, and having multiple policies often results in:

• Higher overall premiums
• Complicated and delayed claims
• Lengthy insurer-to-insurer negotiations
• Administrative processes that can take several months to resolve

In many cases, the frustration and time involved far outweigh the eventual refunds received.

Best Practice For Sectional Title Owners

To avoid dual insurance:

• Always consult your broker or portfolio manager when purchasing a sectional title property.  Sectional Titles Schemes are obliged by law to have insurance.
• Confirm exactly what the Body Corporate insures
• Only insure what falls under your responsibility, such as:
  • Household contents
  • Personal liability
  • Optional additional covers

Already Dual Insured?

If you suspect that you may be paying for duplicate cover, contact your broker immediately to investigate and assist you with the recovery of premiums.

Important:

Most insurers impose a maximum refund period, often limited to up to three years, depending on policy terms and conditions.

Understanding dual insurance is key to protecting not only your property, but also your finances. Proper advice at the time of purchase can prevent costly mistakes and ensure your insurance works exactly as it should.