select
|

'Acts of God' may leave your property uninsured

Flood insurance can be especially tricky if a property is sited in a known 50 or 100 year floodplain - as, for example, many of those washed away in the Laingsburg floods of 1981 were.

Tony Clarke of the Rawson Property Group says that insurance policies usually include clauses which reduce the compensation for which insurance companies are responsible.

Today most municipal regulations are stringent about allowing building in floodplains, but, he says, the fact remains that many hundreds of South African homes are in such areas.
When this is the case, Clarke points out that:

1. It is the seller's duty to draw the attention of the buyer to this, and

2. Almost all insurance policies specifically exclude major flood damage. A special, probably expensive, extra policy will have to be applied for - and this can be expensive.

"Any buyer of a property that might be at risk due to natural disasters should seriously consider whether he can afford the extra insurance to cover these or, alternatively, whether his home is constructed to withstand them."

"I remember well," says Clarke, "that when the river leading into the Knysna Lagoon flooded, as it is prone to do every five to ten years, certain of the ground floors of homes were badly wrecked, while others, having allowed for possibility of a flood, were able simply to do clean-up and to move back into their homes within a day or two of the flooding. Such homes, of course, would not need the extra insurance."

The relevant legislation here, says Clarke, is based on the concept of "supervening impossibility", i.e. disasters of a type or size that the promisor had no reason to anticipate. If such risks were included in the contracts, their whole basis would become insecure and they are, therefore, usually deliberately excluded.

The storms, floods and other 'Acts of God' experienced in KwaZulu Natal, the Eastern Cape and to a lesser extent in the Western Cape over the last few years have reached extreme levels on occasion and, says Clarke, the Rawson Property Group has had to field numerous enquiries as to how insurance companies are legally contracted to respond to these cases.

"In general," says Clarke, "major 'Acts of God' become the responsibility of the state, with the insurance company possibly helping out in a small way. The big question always asked, however, is who is responsible for the repair of a property damaged, i.e. by an incident that could not have been anticipated or allowed for - when this occurs after a sale but before transfer and occupation have taken place."

If and when a disaster hits an area and the buyer has already signed a legal sales document, South African law indicates that the buyer is not expected to move forward with the sale and to take transfer the property until it has been fully reinstated by the seller to the condition it was in when the sale document was signed.

"If the seller cannot do this within a satisfactory time period, the courts are obliged to allow the buyer to cancel the sale, provided, of course, that up to that point he too has met his obligations."
If, as is usually the case, adds Clarke, the seller has a bond on the property, the banks will probably have insisted that he takes out comprehensive insurance, including structural insurance, on the building. This, it might be thought, would kick in when a flood or similar disaster occurs, but, for the reasons mentioned, that can by no means be assumed. It is, therefore, he says, essential that home owners check their policies and take out additional insurance against these disasters.


  Comment on this Article

  Please login to post comments

Post to my facebook wall
  
2000
Characters remaining


    Latest Property News
    • 23 Nov 2017
      Reserve Bank Governor, Lesetja Kganyago, said that the Monetary Policy Committee had once again decided to let the interest rates remain unchanged with the repo rate at 6.75%, and the prime lending rate at 10.25%.
    • 23 Nov 2017
      As the holiday season approaches, most of us are counting the days until that year-end bonus hits our account. There’s nothing quite like a little bank balance booster to get us in the holiday spirit.
    • 23 Nov 2017
      The Adelphi Centre (now entitled “ARTEM") in Sea Point, Cape Town, is being extensively renovated, and once complete will offer an ultra-luxurious galleria style shopping centre unlike any other seen on the Atlantic Seaboard or in Cape Town.
    • 23 Nov 2017
      If you are looking to sell your home in today’s real estate market, there are certain things that you need to include both inside and outside your house. Today’s generation of home buyers is looking toward a more eco-friendly, energy and water conscious home, and if your house stands out then you are more likely to be able to sell it.
    • 22 Nov 2017
      Most people know of the Community Schemes Ombud Service (CSOS) and that levies must to paid to fund its operations. In this article the experts at Paddocks will address some of the issues that are causing confusion.
    • 22 Nov 2017
      While sales have noticeably slowed in most sectors in most Cape town suburbs, the security estate sector in Constantiaberg has bucked the trend by remaining buoyant, with sales by August this year already surpassing total sales in 2016.
    • 22 Nov 2017
      The end of the year is fast approaching, and so are all the travellers, tourists and holidaymakers. For those who live near or own a property in a holiday-hotspot, the festive season also brings with it an abundance of short-term rental opportunities. Its a great way for property owners to make a few extra rand for their own holidays or to put towards their savings.
    • 21 Nov 2017
      The buying process is over, and the moving truck has delivered your household goods to your new property. Now it’s time to unpack and turn your new house into a home.
        
    X
    Subscribe to the MyProperty Newsletter

    Name  
    Last Name  
    Email Address  
    Email Frequency
    select
    X
    Share this Page

       
    For Sale Property
    Rental Property
    More Options
    About
    Connect with us
    FEEDBACK