When it comes to protecting your home, there are multiple insurance products you can have in place, each designed to cover specific aspects of your property. This month we look at important considerations for each type of insurance.

Your home is most probably your most expensive asset, so it makes sense to have as much cover in place as possible to protect it against unforeseen events. Potential homeowners should take these products into account when considering purchasing a home, and current homeowners should review these regularly to ensure they have sufficient cover in place.

  • Building insurance includes everything that is fixed in your home: geysers, fences, buildings, electrical wiring, windows, etc. This excludes the contents inside your home, such as furniture and appliances.

 

  • To avoid over- or under-insuring your home, do a proper property valuation. If you over insure, your premiums are more expensive, but the insurance company will only pay a realistic replacement amount. For example, if your home is only worth R 2 million, but you insure it for R 3 million, your insurance will only replace the property’s worth in case you lose your home in a fire and you will have paid a higher premium in vain.

 

  • Replacement value vs market value: your home should be insured for the replacement value and not the market value, since rebuilding a home includes additional costs, such as removal of rubble, demolition costs, contractors’ fees etc.

 

  • Comprehensive cover: include your yard, paving, boundary wall, garage, garden shed and swimming pool in your cover. If your home burns down for example, you likely have lost all outbuildings and your yard as well. If you only insured the structure of your home, replacing your garden, lawn, pool etc. will be for your own pocket.

 

  • Avoid double insurance: check whether your bond with the bank does not include building insurance already, otherwise you will pay two premiums if you have additional building insurance as well. If you have two policies, only one will pay the claim which becomes an administrative process to gauge which policy will pay.

 

  • When you make any electrical changes to your home, be sure to use an accredited electrician and add the changes as an addendum to your COC electrical certificate. If this process is not followed and you sell your house in future, there could be additional charges for these changes that were not implemented correctly.

 

  • The contents of your home include your valuables, such as furniture, electronics, jewellery, and appliances. Therefore, contents insurance protects these items in case they are damaged or stolen.

 

  • It is advisable to have an inventory of your possessions drawn up and reviewed every two years, to ensure that new items purchased are added to your policy and insured. Keep the proof of payments for electronics, appliances, and expensive items as proof of purchase and value, should you ever submit a claim in future.

 

  • All risk cover: ensure that your laptop, cell phone, and key jewellery items, such as wedding rings, are insured when you leave your home. If you do not have all risk cover and something happens to your laptop while you travel for work, or if your wedding ring is stolen while on holiday for example, contents insurance will not cover the replacement cost since it was not damaged or stolen from your home.

 

  • Power surge protection: due to load shedding being a reality in our country, voltage fluctuations often lead to household appliances being damaged. Ensure that you are sufficiently covered in these instances, since the excess policyholders are responsible for can become very expensive.

 

  • In some instances, banks require new homeowners to have bond protection cover in place as part of their home loan agreement. This is often referred to as credit life cover and includes life cover, disability insurance and income protection for the bond repayment.

 

  • This product covers your bond repayments should you become disabled and lose your job for example.

  • It is advisable to consider having a separate life insurance policy just for your bond. If for example, the husband in a family pays the bond repayments for a house that is in his name and something happens to him, the wife will then have to pay transfer fees to have the property transferred in her name. She will also then be responsible for the full monthly repayment. If the husband has a life insurance policy for this purpose, it will cover the bond and transfer costs to ensure his loved ones are protected.

 

  • The policy can be structured according to the bond term, and cover can be automatically reduced over time as the total bond is reduced.

 

  • Banks will also often offer this option to be added to your bond amount, but this means that you will pay interest on the premium amount as well. It is therefore advisable to source a number of quotes from different insurers, to ensure the most affordable option.

 

  • Cash back option: with certain insurers you can add a cash back option. If after 15 years you have not claimed from your policy, your premiums paid for the entire 15 years are refunded to you.

 

It is important to review your insurance policies on an annual basis, to ensure your cover is up to date. For example, if you made any renovations or added bedrooms to your house, your building insurance should be increased to take this into account. Or if you purchased additional household items, such as a new expensive TV, or new appliances, your contents insurance should be adapted accordingly.