Many sectional title owners renovate and upgrade their units over time with the aim of adding to their living comfort and market value. Unit upgrades typically include lapas, carports, swimming pools constructed on exclusive use areas, enclosed balconies, patios and added-on rooms, while more subtle upgrades might concern the installation of a security system or an air-conditioning unit. Such owner-installed upgrades often pose a challenge when determining the replacement cost to insure a sectional title scheme.

Prescribed Management Rule (“PMR”) 23(3) Annexure 1 of the Regulations to the Sectional Title Schemes Management Act No. 8 of 2011, provides that “a body corporate must obtain a replacement valuation of all insured buildings and improvements at least every three years, and present such replacement valuation to the annual general meeting.” In other words, the body corporate must insure all structures for which it is responsible, such as the buildings, boundary roads, entrance gates, corridors, stairways and other improvements which form part of the common property. The trustees have a fiduciary duty to ensure adequate insurance cover to reinstate all existing structures and improvements to their pre-loss quality standard for which they must appoint a professional valuer at least every three years. The body corporate is not responsible for insuring owner-installed unit upgrades, regardless of whether they are found on a unit’s interior or exterior.

In assessing the appropriate sum insured – also known as the estimated new replacement cost – a qualified valuer must physically inspect and measure the common areas. Since it is logistically impossible for a valuer to inspect every unit in a complex, the onus is on the individual owners to report the replacement cost of additional unit upgrades that they want to insure and for their own account. Individual owners may also request the valuer’s assistance in assessing the replacement cost of their unit upgrades which will then be added to the basic replacement cost determined for the complex. This additional service usually attracts a small fee and the owners concerned must ensure that the valuer is allowed full access to their unit on the date of inspection, as upgrades are not limited to the exterior only.

If done correctly, a professional valuation will expose any illegal unit alterations, for example extensions which were not approved by the body corporate, town council and/or Surveyor-General and not registered. Most unit owners do not realise that their illegal alterations are not insurable while in some instances owners are oblivious of the fact that they may have purchased an illegally extended unit. A valuation will shed light on this circumstance, thereby enabling owners to initiate steps to legalise their extensions. It does not suffice for the body corporate to give the required consent and for the proposed building plans to be approved by the municipality – the finished project must also be verified by a land surveyor and the necessary amendments made to the sectional title plans, to be approved by the Surveyor-General, and registered. Therefore, unit extensions not reflecting on the latest approved sectional title plans cannot be included in the insurance valuation as they are presumed to be illegal and uninsurable. In addition to the insurance aspect, it should be pointed out that illegal alterations are likely to have an adverse effect on a unit’s re-sale value.

Another misconception is that a renovated unit should have a higher replacement cost than a same-sized unit which has been left untouched. While revamping a unit may increase its overall appeal and market value, this does not necessarily imply an increase in its replacement value, especially if the updated finishes are of the same quality grade as before the renovation works, albeit more modern. Considering that a replacement cost valuation is based on the premise of total loss of the immovable property, one must bear in mind that revamping an existing structure is always proportionally costlier than rebuilding the structure from scratch.

In summary:

  • The members of a body corporate are solely responsible for insuring upgrades to their units by reporting the additional replacement value over and above the standard sum insured to the trustees;
  • In the context of buildings insurance: An upgrade constitutes an extension, addition or enhancement which results in an increase of the unit’s size or quality standard, hence, its replacement value;
  • A unit renovation does not qualify as an upgrade if no increase in replacement value has been achieved;
  • Illegal unit upgrades are considered uninsurable. Please click here for step-by-step instructions on how to correctly extend a section.

 Please click here for step-by-step instructions on how to correctly extend a section.

Article reference: Paddocks Press: Volume 13, Issue 4.

Björn Laubscher is the Managing Director of Mirfin Valuations, pioneers of sectional title valuations since 2002.

This article is published under the Creative Commons Attribution license.

Back to Paddocks Press – April 2018 Edition.


  • Where an owner installs an aluminium awning with some blinds, how would this be treated for insurance purposes?

    The awning is first approved by the Board and complies to laid down guidlines, and does not form part of the PQ. Maintenance is for the owners cost.

  • If an owner has a separate private entrance and driveway to their section and EUA who is responsible for insuring their gatemotors and the maintenance of it.

    • Paddocks
      06/02/2019 09:38

      Hi Val,

      Thank you for your comment. We would love to help, however we do not give free advice. Here’s how we can help:

      – We offer a 1-week Free Basics of Sectional Title short course.
      – We offer consulting via telephone for R490 for 10 minutes. Please call us on 021 686 3950.
      – We have Paddocks Club, an exclusive online club, to help you get answers to your questions about community schemes.

      Kind regards,

    14/02/2020 08:21

    If an owner on the ground-floor unit knocks through a bedroom wall to make the bathroom an en-suite, does such an owner have to submit plans or at least get professional approval to do so? Even if it might not be a load-bearing wall? Are all lower-level units’ walls not load-bearing anyway because a unit is above it?

  • Paddocks
    14/02/2020 08:55

    Hi Saskia

    Thank you for your comment. However, we do not provide free advice. Please email us on with regards to your matter, and we can provide you with a no-obligation quote, so that we can assist you.

    Kind regards,

  • Colin du Preez
    26/02/2020 17:03

    How can a Sectional Title owner be supplied with details of insurance policies

    • Paddocks
      28/02/2020 08:59

      Hi Colin,

      Thank you for engaging.

      That’s a great question. This is something our attorneys would be able to assist with. Please email us on with regards to your matter, and we can provide you with a no-obligation quote, so that we can assist you.

      Kind regards,

  • Your article makes no mention of Exclusive Use Areas. PMR 23(1)(b) appears to require the Body Corporate to arrange insurance of structures erected on EUA’s. EUA’s remain Common Property and in terms of the second paragraph of your note, the Body Corporate must insure “all improvements that form part of the Common property”. Who must value and insure structures legally located on registered EUA’s?

    • Paddocks
      26/10/2020 13:04

      Hi Rod,

      Thank you for your comment. Our legal team would need to assist with this query, please send the details or your matter to, and the team will provide a no-obligation quote for their assistance.

      Kind regards