Owning a home is a great asset, but there are many risks attached to home ownership. There are always various measures you can take to protect your home, but the chance of loss cannot be eliminated completely.
It is widely known that insurance remains one of the best risk management strategies. It is a service that offers protection from loss even when unforeseen incidents do occur.
Home insurance is not immune to the complexities of the sector and for homeowners who want to safeguard their homes against loss, a proper understanding of home insurance is absolutely essential.
Here is some necessary information that every homeowner should know about home insurance in South Africa:
The Types of Home Insurance
Home insurance sounds singular, but there are actually two types of insurance coverages available to homeowners:
1. Building Insurance
This is the policy that protects your building. It is the type of insurance that covers the structure (or the home building) specifically.
It is meant to safeguard the building against the risk of loss or damages as a result of the fire, flood, or other forms of natural disaster or vandalism. The policy does not cover anything else but the building.
Depending on the insurance company you sign up with, a building insurance may extend coverage to structures like garages, swimming pools and other durable fixtures like baths, toilets, and fitted kitchens.
2. Home Contents Insurance
Home contents insurance is aimed at offering protection to the contents housed within the physical structure of a home.
It takes care of the inadequacies of the building insurance, covering such things as household valuables against loss or damage caused by natural disasters or malicious activities like burglary or robbery.
Items such as furniture, home appliances, clothing, and precious materials that are kept in a home are protected by this policy. Fixed items in the home that are hardly movable are not considered in-home content insurance.
Is Home Insurance Compulsory?
There are no laws that make it compulsory for homeowners to buy insurance coverage, but this is a highly recommended risk management commodity.
It is not uncommon, however, to encounter situations where home insurance is compulsory. To obtain a home loan, for instance, most banks will make it compulsory for you to hold a home insurance policy since home insurance is a good way to avoid loss and banks aim to be careful with their funds.
In case of an unfortunate incident, you will benefit greatly from the usefulness of a home insurance policy.
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Benefits of Homeowners Insurance
Home insurance is actually a very beneficial commodity. Aside from the fact that it offers financial protection, there are a number of other benefits like:
- It can speed up repairs when incidents happen.
- In some cases insurance companies can take care of temporary accommodation when your home is seriously damaged and is not liveable during repair efforts.
- It will help you to speed up processes like obtaining a building loan.
Cost of Homeowners Insurance
Estimating a figure or an ideal amount homeowners should expect to pay for the cost of insurance is not always accurate. This is because insurance companies will generally consider many things before determining a suitable premium.
The amount will generally boil down to the level of risk your home is vulnerable to. This, in turn, will be a product of factors like location, security, the value of the house and available features in the building.
It is important, however, to be mindful of how much you can spend on home insurance. It is also highly recommended to consult an insurance broker to help you with the process.
The choice of the number of insurance coverage to buy will ultimately depend on you. While insurance policies are very important, it will amount to waste if you are over or under-insured.
It is essential that you review your insurance coverages yearly to avoid being underinsured. As this could also lead to financial loss.
Speak to a reliable insurance broker if you are uncertain about what the Insured value of your house should be.
Most of the problems people encounter in insurance are due to a lack of understanding of the terms and conditions of their policies, as well as what is regarded in insurance as 'small prints'.
There are some clauses that may invalidate an insurance claim and a policyholder is supposed to understand them.
Insurance coverage is essential for every homeowner. It is also important that every homeowner understands the ins and outs of insurance before signing up for a home insurance policy to yield most of the benefits from it.
This article has looked at the major details, but it is still essential to speak with a reputable insurance broker to help with the entire process.