Why is Liability Coverage Essential for a Housing Scheme?
Liability insurance plays a crucial role in safeguarding a housing scheme. It offers protection against claims from individuals who have experienced bodily harm or injury while on the shared premises of the complex. This type of insurance is mandatory for sectional title schemes. In accordance with PMR 23 of the STSM Act:
(6) A body corporate is obligated to procure public liability insurance to mitigate the risk of potential liabilities arising from the need to compensate for: Any bodily injury, loss of life, or illness suffered by a person while on or related to the common property. Any damage to or loss of property resulting from an incident or event associated with the common property.
The insured amount should be determined during general meetings, ensuring it is not less than 10 million rand or any higher amount specified by the Minister for a single claim or the aggregate total within a defined insurance period. It's important to note that the insurance coverage does not extend to liability claims related to economic losses. Instead, liability coverage is primarily focused on situations involving property loss or damage, as well as bodily injury, illness, and the resulting loss of life.