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Purchasing a property is a significant financial decision that offers security and stability. To protect this valuable asset, it’s crucial to have sufficient insurance coverage, according to Andrea Tucker, director of MortgageMe.
Understanding homeowners building insurance, home contents insurance, and personal valuables insurance can provide peace of mind during uncertain economic times.
HOMEOWNERS BUILDING INSURANCE
“This insurance covers the structure of the home against losses or damages caused by incidents such as fire, natural disasters or something less dramatic but no less frustrating – a burst geyser. It can also extend to additional structures like garages, swimming pools, and fixed items such as fitted kitchens,” Tucker explains.
This insurance is typically required by banks when financing a new home, as the bank remains the owner of the property while you’re paying it off. You’ll need to have this insurance confirmed before finalising the bond registration for your home. Tucker advises getting additional quotes to compare, even if your home loan-granting bank provides a quote upfront.
OTHER INSURANCE
Home contents insurance protects personal household items from loss, theft, or damage. However, it typically excludes coverage for fixed items like taps or immovable carpets.
Personal valuables insurance covers items frequently carried outside the home, such as handbags, laptops, and jewellery. When insuring personal valuables, it’s important to accurately state the replacement values of specific items, advises Tucker.
“While home insurance isn’t legally required, other property-related insurance policies are optional but highly recommended. The cost of homeowners insurance is personalised and influenced by various factors, including individual circumstances, property value, security installations in your home, and specific needs.”
Tucker highlights the importance of shopping around for the best insurance deals and regularly reviewing policies to avoid under or over-insurance. It’s crucial to understand the terms and conditions, including the fine print, as it helps identify the coverage and potential areas where a claim may be rejected. “Ultimately, insurance is designed to alleviate the financial burden of unexpected expenses, ensuring you don’t have to bear the costs out of your own pocket.”
INSURING LOAD-SHEDDING ALTERNATIVES
When homeowners consider alternative power sources like solar panels or generators, it’s important to inform their insurer and adjust the sum insured accordingly. “Fixed devices like solar panels are typically covered under homeowners’ building insurance, while non-fixed devices like inverters or a UPS are usually covered under home contents insurance,” she explains.
As several South African short-term insurers have removed national power grid failure cover in 2023 and with the current wave of interest rate hikes, Tucker advises homeowners against cancelling their insurance policies. “Instead, consider insurance bundles that combine building, contents, and personal insurance into a single more affordable package.”
Regularly updating policies and checking for exclusions ensures adequate coverage, especially for high-value items. “Remember, failing to inform your insurer about significant changes could result in partial claim payments.”
BOND INSURANCE
When it comes to bond insurance, which is a life policy that covers the outstanding balance on a home loan in the event of death or disability, it’s important to consider additional coverage options. Tucker suggests looking for policies that offer benefits in case of temporary disability or retrenchment to ensure continued financial security. “This provides a specified period of coverage for bond instalments, offering financial protection for your loved ones. The importance of leaving behind a fully paid home as a legacy in the event of a tragedy should not be underestimated,” Tucker explains.
Staying well-informed about home insurance policies is an ongoing process. Regular reviews, secure digital storage of insurance documentation, and sharing login credentials with trusted individuals are recommended practices.
