Homeowners Insurance

One of the most important insurance policies you will ever purchase is homeowners insurance. Your house is very likely your most valuable possession, and it is in your financial interest as well as for your peace of mind to have it fully protected against events that could damage or even destroy it.

Why is Homeowner Insurance necessary?

As a homeowner, you need insurance cover for the house to warrant that, if anything happens to it, there will be a source of funds to repair / rebuild the structure and to replace any fittings and fixtures that may have been damaged or destroyed in the house. In this way, your savings and financial resources will be preserved and the investment you made when you initially purchased your home will be protected.

If you needed to secure a home loan to purchase your property, the bank will impose the condition that you take out homeowners insurance cover for the structure. The reason for this is that because the bank makes use of your home as the collateral against the loan, they want the value of this asset to remain intact.

What is normally covered by Homeowners Insurance?

Homeowners insurance usually include cover for the physical structure, as well as fixtures and fittings like built-in appliances, cupboards, fitted floor coverings, electrical fittings, sanitary ware, geysers and the like. The types of events that are usually included in a homeowners insurance policy are natural disasters such as storms, hail, floods, lightning, earth quakes etc., as well as non-natural disasters such as fire, explosions, and other accidental damages.

What can usually be added to Homeowners Insurance?

Many policies also offer an option for add-ons such as loss of rent as the result of an insured risk; damage resulting from municipal utility connections on your property, and third party liability.

What is usually excluded from Homeowners Insurance?

Make a point of reading the fine print for exclusions. Many policies expressly exclude riots, strikes, terrorism, landslides etc. If, for example, you are particularly concerned about subsidence and landslides, and feel that you need cover for such eventualities, be sure to find an insurer who is prepared to include these as an insured risk.

Who sells Homeowners Insurance?

It is good to bear in mind that, by law, you have the right to decide who to purchase your homeowners insurance policy from. Although the banks all offer their own products, you may want to consider shopping around first. When you start making a comparison between policies offered by the different insurers, avoid looking at price only; the conditions, inclusions and exclusions that the policies are subject to, are of equal importance.

How much Homeowners Insurance is needed?

When you take out homeowners insurance, don’t step into the trap of purchasing cover based on the value of your bond. Instead, opt for cover equivalent to the replacement value of your home. Also, because property tends to increase over time, make a point of reviewing the sum insured at least once every three years. This will help you avoid the under-insurance pitfall.

When you review the various policies on offer, you should not forget about the contents of your home. If anything untoward happens to your house, chances are your other possessions will be similarly affected. Although household insurance, which specifically addresses house contents, is often sold as a standalone policy, it is possible to combine homeowners insurance and household insurance in a single policy to save on insurance costs.

To conclude

As with all other insurance, you are paying for full protection against financial loss when you’re buying homeowners insurance. You may think the premiums are an onerous cost – but only until the unwanted event happens.