Insurance industry experts are of the view that some 70% of claim costs are as a result of geyser failure, with half of these being the actual geyser replacement other half of costs comprising resulting damages.
The Sectional Titles Schemes Management Act’s Prescribed Management Rules (particularly PMR 31) makes it clear that the maintenance, repair and replacement of geysers is for the account of the owners. In other words, wear and tear related replacements and/or repairs should ordinarily not be covered by insurance unless owners/members, by unanimous resolution, amend this rule.
In practice however, this rule is largely ignored, and insurers operating in the Community Scheme space offer a Maintenance Section to their policies and indeed cover failed geysers. In general, the accepted and owners have an expectation that when their geyser fails, the insurer will cover this loss.
Insurers are thus faced with a high incidence of geyser claims. The writer is advised by insurers and advisors that the only blunt tools to manage this is through limiting geyser cover (limits for certain size geysers), adjusting geyser excess (first amount payable) and adjusting premium upwards. Other interventions include procurement policies where insurers negotiate cheaper geyser and other supplies with distributors of products for their panel of plumbers to make use of.
0861WaterLite has done much research into this problem. Being closely associated with manufacturers, distributors and installers of solar and electric geysers, instead of looking for a cheaper and nastier product, some years ago, Maxlite introduced a much longer lasting 444 stainless steel geyser into this space.
Most standard geysers available and used today are mild steel geysers which inside is glazed with an enamel coating and fitted with a sacrificial anode. This anode is supposed to be replaced at least every two years. Strictly speaking, the only way to achieve longevity on the mild steel geyser, is to replace anodes regularly. This can also have its problems as very few owners, if any, bother to do this. The cost of this exercise including the cost of the anode could be anywhere between R600 and R1,000 per replacement at the time of writing this article.
The H2OMax stainless steel geyser, by its very nature, is very resistant to the corrosion process and thus does not even need an anode. Thus, although the higher specification H2OMax geyser costs some 15% extra fully installed at replacement date, its much lower to zero maintenance cost results in a lower costing geyser over a short period of time. Coupled with the longer expected lifespan of the H2OMax stainless-steel geyser, this option ends up being the most financially viable option all round.
Typically, a standard mild steel geyser comes with a 5-year or less warranty whereas the H2OMax comes with a 10-year warranty. If one benchmarks useful life with warranty period, simple maths will indicate that over such periods, one of the clear solutions is for bodies corporate to consider a higher spec geyser with overall zero maintenance costs and which will last much longer.
The other major factor is honesty. Very often plumbers will unnecessarily replace a geyser. If a geyser is “not working”, more often than not it can be repaired or simply “flushed out”. Statistics have proven that when a reputable and honest plumbing outfit manages the geysers in a scheme, very quickly, the claims ratios improve. Geyser replacement tempos drop and more repairs than replacements become the norm.
Insurance advisors who are serious about mitigation and assisting client schemes are embracing the 0861WaterLite Geyser concept.
The first step simply involves 0861WaterLite auditing or simply checking the general layout and ensuring that the H2OMax geyser will fit.
The broker/insurance advisor then advises the body corporate’s trustees in terms of which insurance product will best suit the geyser solution. Most policies can be precisely structured in terms of premium and in some cases, better terms applied, for example, lower excesses where stainless steel geysers are being employed.
Either the 0861Waterlite call centre number is provided to owners or alternatively, the insurer’s own call centre number, which insurer can normally be directed on record, that a stainless-steel geyser must be installed.
Whilst 0861WaterLite can and will replace any approved geyser product as requested, naturally, the superior WaterLite stainless steel geyser will be encouraged.
So, in summary, if trustees are serious about mitigating against geyser losses, the following main steps should be taken:
- Have 0861WaterLite audit and check your schemes existing Hot Water system
- Encourage the H2OMax Stainless Steel Geyser as the preferred geyser product for the scheme.
- Structure the insurance policy to meet the Stainless-Steel pricing and tweak the excesses and types of geysers more precisely. (Very often policy premiums are priced generally and account for larger geysers that are not even there).
- Install the H2OMax via your insurer as the preferred installers to ensure honest and compliant repairs and replacements. These geysers are thus factory fitted persay with no issues on warranty conditions on installation.
Keep your owners informed of the schemes geyser replacement policy and claims procedure.