Essential guide to home insurance
When you first purchase a home and start looking for insurance policies it can become a bit confusing with all the different terminology and options. Are all the different forms of insurance variations of the same thing? Which ones do you need legally, and which ones can you do without?
In our handy guide we’ll be giving you the run down on everything you need to know about when looking to insure your home, as well as some handy tips on how to find too.
In This Guide:
- Why insure your home?
- Is home insurance a legal requirement?
- Are all forms of home insurance the same?
- What is building insurance?
- What is household contents insurance?
- What is personal valuables insurance?
- How much cover do I need?
- How do I find a good policy?
Why insure your home?
Can you afford not to insure your home? Purchasing a property is a huge investment - most often the biggest investment that anyone can make in a lifetime. What if something were to happen that left your home in a state of disrepair? Could you afford to replace or repair the structure of your home and the contents within it in the event that you suffered such loss or damage?
If not, then it’s safe to say that you will need to take out adequate insurance cover to protect yourself and your family. Our homes are an integral part of our lives and livelihood, and it shouldn’t be left to chance as to whether you have a roof over your head or not.
Is home insurance a legal requirement?
In short: no. It’s not obligatory to have such insurance from a legal standpoint. However, you are unlikely to secure a mortgage bond in South Africa without at least building insurance as a minimum because most banks will insist that you have such cover before granting you a bond.
Banks will also often encourage you to insure your property through their associated insurance company - however this isn’t always the best option. So be sure to compare home insurance policies before you make your decision.
Are all forms of home insurance the same?
No. There are three main types of insurance for your home, and they all cover slightly different things.
Building insurance (also called ‘home insurance’ or ‘homeowners insurance’) covers the actual structure of your home.
covers your furniture and other possessions within your home that are not part of the structure.
There is also personal valuables insurance (also called ‘all risk insurance’). This form of insurance covers all your day-to-day items that you usually take with you when you leave the house, as well as high-value items such as mobile devices and jewellery.
What is building insurance?
The physical structure of your home is covered by buildings insurance. This cover typically covers loss or damage from fire, lightning, flooding, heavy winds, or earthquakes - as well as malicious damage or theft (relating to the structure of your property).
It also covers the fixtures in your home (such as fitted kitchens, bathtubs etc.), and can be extended to cover other structures on your property such as swimming pools, garages and the structures associated with them (such as pipes etc.).
Some insurance policies are also bundled with personal liability cover to protect you from claims from third parties when someone else suffers loss, injury, or even death, on your property.
What is household contents insurance?
Your furniture and other belongings are not covered by building insurance. To cover these items you’ll need household contents insurance.
Household contents insurance policies can cover almost any item in your home from unexpected loss or damage - with insurers able to create custom policies that fit your requirements.
These policies will cover your possessions from loss or damage from theft, burglary, burst water main, malicious damage, natural disasters and electrical damage.
Of course, these policies won’t cover anything that’s covered already by building insurance.
What is personal valuables insurance?
Personal valuables insurance (also known as ‘all-risk insurance’) covers many of the items excluded from building insurance or household contents insurance policies.
Such items include handbags, jewellery, sunglasses, mobile phones, laptops, cameras, and watches.
In many cases, you may need to notify the insurer of the items you want covered under the policy and their serial numbers and value. These types of policy are very customisable so that you can get the right amount of cover for your high-value or sentimental items.
How much cover do I need?
This is an important question to ask yourself as almost a third of South African homes are underinsured by up to 30%. You need to keep on top of the value of your home and the items inside it, and how much it would cost to repair or completely repace all these items.
If you have a policy that only covers you for a total of R450,000 but the cost of repair comes to R600,000, you will need to find the remaining R150,000 yourself. In some cases this can become so unaffordable that one may as well not have had an insurance policy in the first place.
So take your time and really think hard about the level of cover you’d need before taking out a policy.
How do I find a good policy?
This is the easy bit. Once you’ve figured out how much cover you need, finding the cheapest policies that provide the right amount of cover is simple. Just use our website to fill out your details and requirements, and within minutes we’ll show the best insurance policies that match up with what you need. It’s as simple as that!