Understanding the ins and outs of home insurance is crucial. Here’s what you need to know to safeguard your home against any unexpected loss or damage.
For most of us, there is no place quite like home. Not only is it the place where you rest your head at night, but it is also the place that’s likely to house everything you own.
And while there are a number of safety measures that you can invest in to help protect your belongings, homeowners are still vulnerable to the risk of property theft, damage, and loss. Home insurance is one of the best ways to make certain that your property is protected in the event of an emergency.
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Understanding the different types of home insurance
There are three types of insurance homeowners can consider. These are namely; homeowners building insurance, home contents insurance and personal valuables insurance.
1. Homeowners Building Insurance
Home insurance is also known as building insurance. It is a policy which specifically covers the building structure of a home against accidental loss or damage caused by fire, theft or natural disasters like floods.
Depending on the insurance company, the cover can also extend to include other structures like your garages, greenhouses and swimming pools, as well as permanent fixtures around your house like baths, toilets and fitted kitchens.
Some policy suppliers also offer Personal Liability Cover in addition to the building insurance policy. This is to specifically protect property owners from any third party claims. The Personal Liability Cover offers financial protection for property owners should a third party lay a claim against a homeowner for accidental death, injury or illness which may occur on their property. It also offers homeowners financial protection for accidental loss or damage to a third party’s property.
2. Home Contents Insurance
While homeowners insurance protects against loss or damage to the physical structure of your home, it does not cover what’s inside, which is why there is Home Contents Insurance.
Home contents insurance is designed to cover your household goods against loss or damage caused by accidents like theft, burglary, fire, malicious damage, and/or natural disasters like storm and flood damage amongst others.
These household goods include the likes of furniture, curtains, home appliances and clothing. Fixed items within your home however, such as a tap or an immovable carpet are not generally covered by home contents insurance.
3. Personal Valuables Insurance
Personal Valuables insurance is an independent policy separate from homeowners insurance and home contents insurance. This policy covers any personal valuables that a homeowner would usually carry or wear outside of their home, like clothing, handbags, laptops, bicycles or even jewellery.
The policy has two types of cover, namely, specified items and non-specified items. The non-specified items policy covers a standard list of general items and will pay up to a certain amount should any loss or damage occur. The specified items policy allows you to individually insure your most expensive items, like cell phones and laptops against accidental loss or damage and will compensate up to the amount specified in your policy schedule.
Is home insurance compulsory?
While there is no specific law which makes home insurance compulsory, most banks make it an obligatory requirement for homeowners who are in need of a home loan.
When you apply for a home loan, the bank will request that you take out a comprehensive insurance policy to the value of your home. The purpose of this is to protect you (and the bank) from the risk of structural damage to your property. Should something unfortunate happen to your property, like having it burn down, the bank would want to know that home insurance is in place to cover such a catastrophe.
Remember, you don’t necessarily have to take the homeowners insurance that your bank offers, but it is still compulsory for you to prove that you do have this type of cover in place should your home be financed through a bank.
While mortgage providers do make homeowners building insurance compulsory, other property-related insurance policies, like Home Contents Insurance or Personal Valuables Insurance are not mandatory. It’s always a good idea to get insurance coverage, even if you are not financing your home through a bank. Insurance cover on your property is essential as you may not always have surplus funds to cover the costs of rebuilding your home, should something unfortunate occur.
Why home insurance is important
Aside from offering financial protection, there are many other benefits of home insurance:
Should your house get damaged, you can get repairs done in a timeous manner and don’t have to wait an extensive period to rake up the necessary funds.
If you have an emergency covered loss, home insurance will provide emergency repair services to protect and prevent your home from further damage.
If you can't live in your home because of a mandatory evacuation, your insurance policy will cover your temporary living expenses – provided that your insurance claim is approved.
Some policy suppliers also offer a no-claim rewards incentive where homeowners can reclaim cash back after a specified number of premiums are paid.
A number of policy suppliers also provide the option to include unique provisions above and beyond the normal coverage offered, to effectively accommodate homeowners.
What is the cost of homeowners insurance?
It is difficult to provide a specific figure of what property owners can expect to pay for home insurance. This is because the monthly premium paid for any insurance policy is tailored in accordance to each individual. The cost is calculated by weighing up a number of factors such as the individual’s personal circumstances, the value of the person’s property as well as any additional specific requirements that may be included in that particular person’s policy.
It’s important to take charge of your finances. Shopping around for your insurance premium is essential to ensure that you get the best deal. Even if you do have an insurance policy in place, you can still shop around and move your policy to a company that offers you a better deal.
Consider liaising with an independent property valuation expert or by visiting an insurance comparison website online. Doing so will provide you with essential information to help find the most suitable policy for you.
When insuring your home for its market value, it’s also important to keep in mind that replacement costs will differ in accordance with a variety of factors, such as the location of a property, as well as the property’s design and finishes.
How much insurance cover do you need?
The responsibility of making sure your house and contents are properly covered ultimately lies with you, which is why it’s important to review your insurance policy yearly. This will help to ensure that you are adequately covered and will offset the risk of being under or over insured.
For home contents insurance, in particular, it is important to remove items from your list which have depreciated. Items such as cell phones and laptops tend to lose their value as the years progress, which is why it makes financial sense to remove them from your list and avoid spending extra money on depreciating gadgets with little value.
For homeowners building insurance, on the other hand, it’s important to bear in mind that your policy should cover the cost to completely rebuild your home should anything unfortunate occur. Doing so will ensure you are adequately covered and will avoid financial distress.
If you are unsure if your policy offers sufficient cover it is crucial that you liaise with your policy provider and adjust your coverage accordingly.
Exclusions in household cover:
It’s important for policyholders to read and understand the terms and conditions of their cover. This will help you to identify what you are covered against.
If you are uncertain about any of the clauses in the policy, consider speaking to a broker or an attorney with the necessary knowledge to better understand the policy’s terms and conditions.
While most home insurance policies do cover a wide range of accidents, there are instances in which a claim may also be rejected, like:
Damage caused by pets such as soiling, scratching, tearing, denting or defacing of the property.
Should you run a bed and breakfast from home; the appliances in the rooms are excluded from household cover.
Not all theft claims are covered unless forcible or violent entry on the property is visible.
If there is an indication of poor property maintenance resulting in damage that could have been avoided.
If there is damage to the property caused by roots and weeds.
Chipping of sanitary ware, wall or floor tiles or paving is not covered.
If there was a lack of sufficient security in place at the time of your claim.
If your home was left unoccupied for a significantly long period of time.
Whether you’re looking to buy a house or have been a homeowner for years, paying towards a home insurance policy can help to prevent financial strain later down the line by covering you against any unexpected, large expenses.