Whether you recently bought your first home or are in the process of buying one, you are on the right track. A home is a good lifelong investment. Property is one of the few investments that yields a return while your investment grows in value.
Always keep your insurance policy in such a state that, if you need to make a claim, your insurance company does not find a single loophole not to pay you out in full.According to Seeff Properties Chairman, Samuel Seeff, it is the right time to invest in property.
But, it simply does not end there. There’s an essential element which forms part and parcel of homeownership: homeowner's or building insurance. Homeowners no longer need to be solely concerned about theft and housebreakings. Mother Nature has proven to be a growing concern too.
We are continuously being hit by various acts of nature, such as earthquakes, storms, floods, hail, lightning and landslips. Homeowners need to be prepared for any severe climate change, which could affect their precious investment.
The purpose of insurance is to prepare you financially for any loss or damage to your assets, and to cover the bank if they have financed you.
What is homeowner's or building insurance?
Homeowner's or building insurance can be seen as buying peace of mind. Think about everything you would leave behind when moving out; that’s what’s covered. It’s essentially your home’s physical structure and outbuildings; all the permanent fixtures, fittings and improvements such as driveways, walls, the roof, garages, fences, patios, swimming pools, borehole and spa pumps, gate motors, tennis courts, underground pipes and cables.
When will you be covered?
When misfortune knocks at your door, you need to ensure that your home’s structure or permanent fittings can be rebuilt or repaired. Homeowner's or building insurance will cover you for damage caused by:
1. Theft and attempted theft
2. Malicious damage
3. Fire or explosion
4. Acts of nature such as wind, lightning, storms, hail, flood, snow
5. Earthquakes
6. Burst, leaking or overflowing geysers or water-heating systems and water pipes
7. Impact caused by vehicles, falling trees and aircrafts
8. Animals
9. Power surges and dips
10. In certain cases, political activities
Please note tha tmost insurance companies will not cover sewerage pipes, dams and dam walls, jetties and piers, loose gravel paths and coverings, as well as pool cleaning equipment. There are a number of things not covered under ‘exclusions’ and ‘liability to other people’ with all insurance companies. Familiarise yourself with these sections before taking out any cover.
Lessons learnt from the earthquake that hit North West in August 2014
Always bear in mind that insurance companies offer diverse cover relating to earthquakes or earth tremors.
According to Justmoney editor, Angelique Ruzicka, Standard Bank’s policy specifies that "you must prove that the damage was not caused by mining operations, and you must pay the first R2 500 or one percent of the loss or damage (whichever is higher) if it was caused by mining operations.”
Absa Homeowner's Policy covers damage caused by mining-related earth tremors, an Absa spokesperson says.
MUA Insurance Acceptance managing director, Christelle Fourie, says people should check their cover, as they might not have full cover. She says this is a wake-up call for insurance companies and holders. MUA Insurance Acceptances reviewed its policy wording and decided to remove an antiquated exclusion which previously excluded damage caused by an earthquake, if it was determined that the earthquake was caused by mining-related activities. All MUA clients, new and existing, now benefit from full cover for any damage caused by any earthquake with no exclusions.
What’s in it for you?
Most insurance companies offer optional products you can take in conjunction with your building cover. These include veldfires liability, comprehensive subsidence cover (cover in case of downward movement of land caused by human activity, natural shifts, normal settlement, shrinkage or expansion of soil supporting the structure as well as volume changes in clay-based soil caused by changes in moisture levels), pipes and water-heating systems wear and tear, and extended theft cover for unoccupied buildings for more than 30 days at a time.
Property owners can enjoy the following benefits with homeowner's or building insurance: fire brigade costs in case of an incident, temporary accommodation arrangements after incidents leave your house uninhabitable, automatic cover for accidental damage of fixed glass and sanitaryware, as well as water, gas and electricity connections between your home and the public supplies.Cover is also provided even if a claimable incident causes damage or loss to your building materials or fixtures and fittings during construction or alteration.
Various insurance companies offer cash back rewards for not making claims over a certain period of time. This is money back in your pocket for taking extra protective measures towards your possessions. In addition, you get to save on your overall insurance bill each month by consolidating all your insurance cover under a single insurance provider. Meaning you pay less by taking vehicle, building and content cover with the same insurance company.
Chris Green from Globalfundi, says it is in the interest of the buyer to ensure that they understand all the options around their insurance. He says it is not just about their home loan monthly payments.
Being under- and over-insured
Craig Deats, Insurance Managing Executive at ooba, says property owners need to ensure that the sums insured (replacement values) on their properties are increased proportionally with current building prices. He says if they are under-insured at the time of claiming, they will find that their insurers will not settle their entire claims. Simply put: under-insurance is when your insurance cover is less than what it would cost to replace your damaged property. You end up having to cover part of the damage yourself.
Over-insurance on the other hand, is when your insurance cover is more than what it would cost to replace your damaged property. You end up paying too much in premiums since the market value of your property will be less than the insured amount. Avoid being under-insured or over-insured and aim for insuring your property for the correct value. It remains your responsibility, and only you can lose out when disaster strikes.
Property owners need to remember that insurance is a personal choice. You have a right to shop around for the best insurance cover that will meet your unique needs, whether you took a mortgage or not. Financial institutions automatically include homeowner's insurance when they issue a mortgage, but it is not compulsory to accept it.
Take charge of your finances. Do your own research. Ask your mortgage originator, as they are independent from banks and insurance companies. Shop around and compare quotes, cover, claims procedures and ensure that you understand what is not covered, understand the insurance terminology and how much your excess is before making your choice.
Once you have taken the cover, ensure that you have everything in writing. Do not forget to keep your cover updated and relevant to your current financial situation.
Always keep your insurance policy in such a state that, if you need to make a claim, your insurance company does not find a single loophole not to pay you out in full. You can only achieve this by taking a hands-on approach to all kinds of insurance you take out.
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