When it comes to insurance in South Africa, nothing is quite as hotly contested when it comes to the contents of your home and your motor vehicle. It’s intricate – did you set the alarm, where did you park, etc. That’s why you need a guide to household insurance.
Fortunately, household insurance is a lot less contentious and clearly defined so it is easier to zone in on the risks. In this post we will go through the basics of how householder’s insurance works in South Africa.
Guide to Household Insurance – What Constitutes Good Cover?
This is something that you don’t want to have to find out when it comes time to claim. You should have cover for all the structures on the property, including gates, walls and swimming pools.
Good cover is cover that allows for an increase in fees from one year to the next. But don’t assume that every policy offers this, especially if it was taken specifically to cover your bond.
Some policies work on replacement values, and others work on the outstanding amount of the bond. The latter is normally cheaper and gives you peace of mind for payment of your bond in the event that something goes wrong.
What you also need to consider, though, is what happens when you need to rebuild. It is better to pay a higher monthly premium and have full cover for the full value of your home. This policy value increases over time. When it comes to your bond, the value decreases every year.
Your policy should make allowances for the replacement cost of your property. Say, for example, your property burns to the ground. You need to consider how much it would cost to rebuild, rather than just the plain market value.
Guide to Household Insurance – Rather Undervalue Than Overvalue
It might be a wise idea to have the house professionally valued. This would cost you money in the short-term but could save you from the perils of underinsurance when a claim needs to be made.
A more accurate value also decreases that chances of you over-insuring your home. A good time to do this is when purchasing your home. If you are taking out a bond, the bank does send an assessor but their purpose is just to confirm that the property is worth the purchase price.
Getting a third-party in to do your own valuation is a much better idea.
Guide to Household Insurance – What is Covered?
This depends on the policy and the level of cover you choose but it is a good idea to get this set out in the beginning. What risks do you have cover for? What situations might lead the company to decline your claim?
For example, if you have a large selection of books in your home, this could constitute an increased fire risk. It is better to declare such things upfront. Another example could be if you have a thatched roof.
Companies will also consider how old the property is, if you use gas in the home, if you have a fireplace, generator, etc.
Finding out what you have cover for, what it excludes. That is especially important. Find out what excesses you have to pay and reasons that your policy might not pay out. It is essential to understand the terms and conditions before you sign up. It may be too late when you have to put in a claim.