Home insurance is a risk management strategy that can protect you from the risks associated with owning a house either fully or through a mortgage arrangement.
While many homeowners (those that built or bought their homes with cash) have the option of having a home insurance coverage or ditching the idea, those on the mortgage are always covered compulsorily.
Most lenders require that homeowners have home insurance policies and this is why the percentages of those under a mortgage that are covered are often high in different countries.
For many, home insurance is just another expense created by mortgage companies to increase the amount they have to pay before finally owning their homes.
This sort of thinking always leads to opting out of home insurance once mortgage payment is completed.
There are many people who do not have home insurance because they cannot afford to be covered. They can't pay the monthly premiums and decide to live without any home insurance coverage. You will also find some individuals who are so wealthy that they do not see the need for home insurance. They would rather cater for any loss that will arise as a result of damages of any sort to their properties.
The last set of individuals are those who would like to have their home insured but they are ineligible to apply for a coverage because of various factors.
These individuals might have been declared uninsurable due to several recent claims, ancient electrical systems, ageing pipes, and other factors that push risks to an astronomical height.
For those who have options to be insured and decide not to, the reason in most cases is to save costs, but is this really saving cost in the long run?
Signing out of your home insurance or refusing to buy a policy at the initial stage may save you some money, but is the extra saving really worth the risk?
To answer these questions, we will consider the pros and cons of having home insurance and the importance of hiring an insurance broker to assist you through the process of acquiring the best insurance cover for you.
Pros of Getting Home Insurance
Compensating for the Losses/Damages
The real importance of home insurance is realized in the event of an unforeseen disaster. The right level of coverage will protect you from a loss in a case of a disaster like a fire or other natural disasters covered by your policy.
All you will be required to do is pay the deductible and that will be the only out-of-pocket expense you will make towards rebuilding and replacement of the valuables destroyed during the unfortunate incidence.
Protection from Unforseen Liability Suits
This is another big factor that makes home insurance so indispensable. It covers you against liability suits. There are several circumstances that can result in a liability suit and contrary to what many assume, you can’t really control these factors.
Someone may slip and get hurt in your house, your dog may injure another person, or your tenant in a rented apartment can be hurt by a faulty system.
While it is pretty straightforward to estimate the cost of replacement, settling liability suit can be quite unfavourable and you really want to avoid it completely and that gives most of us another compelling reason to have home insurance.
Getting Temporary Residence
There are damages to homes that render them uninhabitable until fixed. When your home is damaged to this extent, you will need a place to stay until the problems are fixed. This feature is only covered by some home insurance policies, depending on the policy you get.
In an event of a disaster your insurance company might pay for your temporary place of residence while the damages caused to your home are being repaired.
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Protection Against Burglary
Burglary and activities of vandals are other risk factors that you may need protection against. Depending on the level of your home insurance you might get a cover against home burglary.
When your home is burgled, your insurance company will replace the stolen possession. There is a limit to the number of high-value possessions, so you may have to look for the additional cover to protect them.
Cons of Getting Home Insurance
Cost of Coverage
This is basically the major reason people sign out of their insurance coverage. Like several other essential commodities, insurance is not always very cheap. Some homes might require a higher premium based on their location and the value of the property.
Those that have very expensive properties at ocean fronts may have to pay a high premium to insure the luxury properties and this amount can be a major issue for most homeowners.
Retirees and individuals on strict budgets can find it hard to keep paying premiums. The problem here is that people see insurance just as an expense rather than seeing it as an essential investment.
Finding the Right Insurance
It can sometimes get difficult to find the right insurance. If you are not careful it easy to be over-insured or under-insured. This can be avoided by hiring a reliable insurance broker to help you through the process of acquiring the right insurance cover based on your needs. An insurance broker will help you understand the details and get the right level of coverage that offers value at the right price.
The Risk of Claim Rejection
To be affected by an unforeseen disaster and then having your insurance claim rejected by the insurance company can be devastating.
This is certainly a major disadvantage though the chances of this happening can be significantly minimized if you choose to hire a professional insurance broker to help you through the process of getting the right home insurance cover for you.
Getting an insurance policy through a reputable insurance broker in South Africa can greatly reduce all the disadvantages connected with getting an insurance cover. An insurance broker will not only help you get the best deal possible but will also help you if there arises a need to make claims.
Just as there are several pros to having a home insurance, there are some cons too. Contact a qualified Insurance Broker in South Africa if you would like to enjoy the benefits of home insurance without experiencing the disadvantages.