A new house brings with it a wealth of new responsibilities. One of these is that you need to consider what will happen to you, your family or your house if your circumstances change. No matter how unlikely this may seem, life is full of surprises, and you need to plan for every eventuality. The best way to make sure that you are covered in a crisis is to have sufficient insurance in place to help you through any difficult times.
“There are two main types of insurance that a home-owner should have,” says Craig Young, Managing Executive of Insurance at ooba, South Africa’s biggest bond originator and provider of insurance cover for all property matters. “In some cases your bank will insist on some form of cover; in others it is optional – but in all cases it’s a good idea.”
Buildings insurance is one of the most important policies you will purchase. It covers the structure of your home as well as all the permanent fixtures and fittings in it, against damage caused as a result of unexpected events like fire, flood and lightning. Your bank will insist that you have such cover, but they can’t compel you to take their insurance offering. If you wish, you can obtain buildings insurance cover from any accredited insurer, freeing you up to compare costs, coverage, benefits, reputation and service.
“Buildings insurance protects your home from costly damage caused by unforeseen circumstances,” says Young. “For instance, if your geyser bursts, the insurance will cover its replacement and any consequential loss up to a certain limit such as the costs of home repairs and painting.
“Your home is usually your most expensive asset, but maintaining a home can be expensive, and when unplanned events occur, it’s incredibly beneficial to have this kind of insurance as a lifeline,” says Young. “This is why banks make it compulsory – they are safeguarding your asset.”
Bond protection insurance
Of course, when you consider buying a property, you work out whether you can afford the repayments – and if you’ve had your bond approved, obviously your bank thinks so too. But both you and your bank have to count on you remaining employed and in good health.
“It is very important to consider what would happen to you and your family if, for some reason, you were unable to pay your bond for any period of time,” says Young. “Bond protection insurance provides comprehensive cover in the event of death, disability, dread disease or retrenchment.”
Your bank may not insist that you have this type of cover, but Young advises you consider it, nonetheless. “No one likes to think of bad luck befalling them, but if something bad does happen to you, the best outcome is that you or your family won’t lose your home,” he says.
What it costs
When you’re buying a house, the last thing you want on your plate is an extra expense. Just remember that a small monthly payment now can save you from enormous financial strain later. But of course, you’ll want to know exactly how much it will cost you and whether you’re getting the best deal.
“Because insurance cover can be tailor made for your specific circumstances, taking into account your situation as well as the value of your house, it’s not possible to put a single, straightforward cost to bond protection and buildings insurance,” says Young.
For buildings insurance, the structure of your house – what the building and the roof are made of – as well as the type of residency – holiday home or permanent residence – all play a role in the risk assessment and therefore, the cost of your premiums. This type of cover will always be subject to exclusions and excesses, but will cover the bulk of your expenses if the loss forms part of an insured event.
For bond protection insurance, your premiums are determined in line with various socio-economic factors which include monthly income, age, gender, smoker status and level of education. However, with a product like ooba’s Bond Protector no medical clearance is required and you can qualify for cover up to R1.25 million (pre-existing conditions may be excluded). ooba’s competitive insurance offering is made up of buildings insurance and bond protection insurance tailor made for your specific needs, from the home loan experts. And ooba offers the convenience of taking out insurance at the time of applying for your bond, saving you time and hassle.