Are You Struggling to Get Insurance Cover for Your Sectional Title Scheme?

In the past few months, we’ve noticed a concerning trend in the sectional title industry, some schemes are finding it increasingly difficult to secure insurance cover for their buildings and common property. Trustees and managing agents have shared how insurers are declining outright or imposing premiums so high that they become unsustainable.

For schemes already under financial pressure, this adds yet another layer of distress.

Why Are Schemes Struggling to Get Cover?

Insurers don’t decline lightly. When they do, it’s often a sign that deeper risks exist within a scheme. Some of the most common reasons include:

• High-Risk Locations

  Buildings situated in flood-prone or fire-prone areas may be seen as too exposed to natural disasters.

  
  

• Deferred Maintenance

  Many schemes are battling with arrears and rising costs, leading to delayed upkeep. Crumbling facades, leaking roofs, outdated electricals, and deteriorating plumbing raise serious concerns for insurers.

  
  

• Non-Compliance with Regulations

  Fire equipment not serviced, electrical certificates expired, or lifts without valid inspections, these are red flags that insurers cannot overlook.

  
  

• Claims History

  Frequent burst pipes, fire claims, or security-related incidents suggest systemic problems within the scheme.

  
  

• Security Concerns

  Lack of controlled access, perimeter fencing, or functional surveillance can also deter insurers from taking on the risk.

In short, many schemes are caught in a vicious cycle: arrears reduce cash flow, which delays maintenance, which increases risks, which leads to insurance refusals further compounding the financial pressure.

The Trustee’s Dilemma

Trustees are placed in an unenviable position. They must balance levy collection, rising operational costs, and owner resistance to increases, all while ensuring the scheme remains compliant with legal requirements. When an insurer refuses cover, trustees may feel cornered, with limited options on the table.

The good news is that trustees can take proactive steps to improve their scheme’s insurability. Some practical actions include:

1. Conduct a Maintenance Audit

   Review the state of the building—roofs, plumbing, electrical systems, paintwork, and security. Identify urgent repairs and create a realistic maintenance plan.

   
   

2. Update Compliance Certificates

   Ensure fire equipment, electrical compliance, lifts, and other regulated systems have valid certifications and are serviced on schedule.

3. Strengthen Security

   Simple measures like improving access control, fixing perimeter fencing, or adding lighting and cameras can reduce risk dramatically.

   
   

4. Address Levy Arrears

   Strong levy collection policies give the scheme the cash flow needed to stay on top of maintenance and show insurers that the scheme is financially stable.

   
   

5. Engage in a Risk Survey

   Independent risk assessments help trustees understand what insurers see and provide a roadmap for mitigating those risks.

The challenges facing sectional title schemes are real, but being declined by insurers doesn’t have to be the final word. With a proactive approach to risk and compliance, many schemes can turn things around.

At MONO.insure, we’ve helped trustees in exactly this position. By combining risk surveys with clear mitigation strategies, we’ve managed to reopen doors that once seemed firmly shut, securing quotes for buildings previously considered “uninsurable.”

The insurance challenges facing sectional title schemes reflect broader industry pressures, aging buildings, financial strain, and compliance gaps. But trustees who act early and strategically can restore confidence, protect their scheme, and access the insurance cover they need.

And for those who feel stuck, working with the right partner can turn “declined” into “quoted.”