Home vs buildings insurance

When looking to insure your home it is easy to get confused between building insurance and home contents insurance. We’ve put together this handy guide to talk you through the differences between the two, as well as explaining what you might need to consider when looking for .

In This Guide:

What is building insurance?

Building insurance is also known as ‘home insurance’ or ‘homeowners insurance’. It is arguably the most important type of insurance out of the ones we’ll be explaining in this guide.

Building insurance ensures that the physical structure of your home or business is covered against catastrophic damage. This could include damage from fire, flooding, lightning, heavy winds, or even an earthquake.

Many people would not be able to afford the large lump sum cost of repairs in the events of these kinds of damage, which is why building insurance is vital.

Building insurance covers:

  • The structure of your home against accidental loss or damage (including from fire, theft, flooding, lightning, or damage caused by a third party).
  • Fixtures (e.g. fitted kitchens, bathtubs, etc.)

Your policy could also potentially cover other structures on your property, such as your swimming pool or garage.

Some insurers will also offer personal liability cover along with your building insurance as a package deal. This type of cover will insure you against claims from third parties when someone else suffers injury, illness or death on your property; or if there is loss or damage to a third party’s property.

Just as a note: it is not compulsory to have a building insurance policy in South Africa, however most banks would require you to own such a policy if you are looking to take out a home loan.

What is household contents insurance?

Building insurance insures the physical structure of your home, but not your belongings inside. That’s when household contents insurance comes into play.

Household contents insurance protects you from the unexpected loss or damage of items in your home. You can cover almost anything within your home, and many insurers offer custom packages to suit your needs.

There were 22,431 cases of residential robbery last year, as well as 220,865 cases of burglary - but only two thirds of South African homes are insured with many homes being underinsured.

Household contents insurance covers:

  • Household items against loss or damage from a burst water main, theft, burglary, malicious damage, electrical fires or natural disasters.

  • Potentially anything from your appliances to your clothing.

Fixed items are excluded from this type of policy as they are usually listed under Building Insurance.

What is personal valuables insurance?

Whilst we’re explaining the types of insurance for your property, it is worth mentioning personal valuable insurance (also known as ‘all-risk insurance’).

This type of policy is separate to building and household contents insurance and covers items that you may take with you when you leave your home day-to-day: for example, your mobile phone, laptop, handbag, jewellery, camera, watch, sunglasses etc. All of these items are covered by personal valuables insurance.

There are two types of cover: non-specified and specified. Non-specified covers a general list of items and pays a set value in the event of loss or damage. Specified cover is for more expensive items (such as your laptop or smartphone) and will pay out according to the terms of the policy that you agree to with your insurer.

Which type of insurance should you get?

Generally speaking: both. If you own your home then it is wise to get building insurance to cover the structure of your home as well as home contents insurance to cover your personal belongings.

However, if you own a flat things are a little different. You will still need home contents insurance, but it is usually the responsibility of the trustees of your building to make sure that the building is insured - so it is best to speak to them to find out what your situation is.

Do you have sufficient cover?

When you compare building insurance policies be sure to keep on top of the value of your home. Statistics show that almost a third of South African homes are underinsured by up to 30%.

If you’re underinsured you run the risk of being out of pocket in the event that you need to make a claim on your building insurance policy.

For example, if your home is insured for R500,000 but the cost of rebuilding and repairing your home is R650,000, you will need to find another R150,000 yourself to make up the difference.

How to choose a building insurance policy

When looking for a you’ll need to keep a few things in mind to get the best out of your policy.

Be sure to shop around and compare policies to make sure you’re getting the best deal. A price comparison site such as ours can save you a lot of time and effort by fetching the best policies that match your requirements.

Also, be honest about the value of your property so that you don’t run the risk of finding yourself underinsured, and keep your insurer in the loop with regards to any changes or renovations you make to the property.

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