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Promoters held accountable for lapses in mandatory insurance of shared amenities.

Karnataka RERA Issues Notice to Builders: Insure Common Areas or Cover Disaster Repairs.

Karnataka RERA has clarified that builders must insure common areas or face liability for disaster-related repairs. In a recent judgement, the regulator instructed developers of an apartment complex on Kanakapura Road to submit all insurance documents within 30 days after a fire damaged a clubhouse washroom and sauna on 30 January 2024. While the tribunal acknowledged that the fire was caused by an overheated sauna heater and occurred years after the clubhouse was handed over to the owners' association, it identified a serious breach of mandatory insurance requirements under Section 16 of RERA. The promoter had not provided any insurance policies, premium receipts, or proof of transfer of insurance benefits to the association. The authority highlighted that insurance for common areas is compulsory and residents should not bear the burden of avoidable losses. The ruling reinforces that promoters are responsible for ensuring complete insurance coverage for all shared amenities.