Over the past few of months I’ve had received several emails from people complaining about problems they’re having getting insurance companies to pay for the damage to their property caused by the winter’s heavy rains.
Without exception, all the complaints and enquiries I get about insurance issues are sent by those living in apartments, houses and other building complexes that are registered as ‘Jointly-owned buildings’.
A typical complainant will write:
“The roof of my apartment block is leaking and the Management Committee refuses to help.
“They say as the damage is in my apartment it’s up to me to sort it out. My insurance company doesn’t want to know.”
A couple of emails later it transpires that the Management Committee had only insured the ‘jointly-owned property’ (communal areas insurance); i.e. every part of a building under joint ownership which has not been registered as a unit, where they should have insured the ‘jointly-owned building’ as required by the law:
“The Management Committee must insure and always keep insured the jointly-owned building against fire, lightning and earthquakes with a licensed underwriter for the sum which the Management Committee considers as corresponding to its replacement value.” (Refer to Article 38L of the Immovable Property Law.)
The ‘jointly-owned building’ refers to the whole complex and not just the ‘jointly-owned property’. Even some of the ‘professional’ property management companies and lawyers, who should know better, get this wrong!
This image shows a jointly-owned building outlined in red. It includes some properties that share a pool and a number of other properties with pools for their exclusive use. It also includes car parking areas, gardens, drainage, pavements, roads, etc, etc. Everything within the red boundary line is the jointly-owned building.
But then there’s a second problem. Management Committees tend to buy get the minimum insurance cover as required by law – fire, lightning and earthquakes.
This will not help the complainant whose apartment is being damaged by a leaking roof; he needs insurance cover for storm and flood!
Management Committees should get comprehensive insurance cover for the jointly-owned building to protect the owners’ investments. A comprehensive policy should include cover for:
- Fire & Lightning
- Malicious damage
- Removal of Debris
- Professional Fees
- Escape of water
- Accidental damage
- Storm & Flood
- Alternative Accommodation
- Trace and access
- Keys & Locks
- Firefighting Expenses
- Public Liability for the committee
- Public Liability for the owners
- Personal Liability of the committee
(Trace and access is insurance that covers the costs of detecting and repairing the source of a water leak.)
However, a Management Committee wishing to obtain additional insurance cover must convene a General Meeting of owners and put the proposal to a vote; at least 50% of the owners must vote in favour. (Refer to Article 38L of the Immovable Property Law.)
I spoke with the head 3D Global’s insurance department, Andrew Stott, who said:
“Unfortunately, I hear of insurance agents offering very poor advice just to line their own pockets and have read articles from so-called ‘experts’ that are totally incorrect. One company even recommends you purchase literature them that’s available on the internet for free!
“It’s essential that any company or individual offering you advice or selling you insurance is listed on the Register of Insurance Intermediaries.
“One insurance broker advised his client that the renewal of his house insurance was due and that the renewal premium was €700. The client thought this was rather high so he spoke with another broker. The broker obtained a quotation from the same insurance company and advised him that the correct premium was €650!
“Following a change in the law last year, insurance premiums must be paid directly to the insurance company. This change was made because a number of cases were reported where people had paid insurance premiums to agents who pocketed the money rather than forwarding it to the insurance companies, which left the people uninsured!”
Everything you need to know about the insurance of jointly-owned buildings. By Miltiades Miltiadou – Independent Insurance and Risk Management Consultant.