OK so this is a bit of a rabbit hole.
The trustees of a sectional title scheme need to insure the buildings, and the premiums are recovered from the levies, yes. However, the general theme of these policies (as per the ST Act) are that if individual owners feel that the insurance coverage is insufficient, they can obtain insurance for the additional value, but are then liable to pay the extra cost. It effectively transfers the responsibility of determining insurance value (of the unit) back to the BC member. You will note this from your study of the AFS and minutes of the last AGM. You will probably see that the insurance "top up" clause is stated after the proposed budget for the year.
If you didn't get these documents, you can request the estate agent to obtain them on your behalf, or you can get them from the managing agent of the scheme. They are part of
a number of documents that you ought to request and study,
before putting in an offer.
It is also important to note is when the last independent property evaluation was done (you can ask the managing agent for a copy). Trustees who are on top of things ensure that an independent valuation is done every 3 to 4 years. Also ask to see the actual insurance schedule, it should cover the following (for example in the event that a fully fueled Airbus crashes into complex):
- The replacement / restoration cost of all buildings, including garages;
- Replacement / restoration costs of the common property (and any improvements);
- Public liability insurance;
- Trustee indemnity insurance;
- SASRIA;
- Accident damage cover; and
- Reasonable excesses
Optional ones are:
- Loss of rental;
- Theft of money (WTF);
- Geyser insurance (like WTF!)
- Malicious damage;
- Subsidence (optional but critical --for example in a dolomite area).
Ask to see that FAIS license of the broker and whether the independent evaluator or insurance advisor has professional indemnity insurance. The insured value should not only cover the re-building of buildings and common property, but also budget for professional fees (like architects), and rubble removal costs. These add quite a bit (up to 45%) of the total insured cost. Also important to note that it covers everything in your unit that is fixed, but not things like furniture, loose rugs, clothes and jewelery etc., these you will need short term insurance for.
So if, for example, you have really expensive things like double glazing, extra luxury tiles / taps, expensive inverter airconditioning, alternative energy (solar panels, inverter and batteries); things that were improved on your section but not on others, then you may want to consider topping up the BC's standard insurance. And that may be the reason that your financier is requesting a review of it, they are actually acting in your best interest. Lastly: They will try to arm-wrestle you to take up their (expensive) insurance policy, but you are not obliged to do so. You can get far cheaper building insurance top-up from most insurance houses, just agree to provide them with the agreed schedule.
