Home Insurance-Insurance For Where You Live |
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If you own a home you will need two types of insurance to safeguard your assets. The first insurance policy that you will require is home insurance, which provides coverage for the actual structure in which you live (your house, flat, townhouse). The second insurance policy you need to buy is home insurance, which covers the contents of your house. In part two of this article we will discuss household insurance in more detail. For now we're going to focus on home insurance. For most South Africans their home is the single most valuable asset that they possess, and insuring it absolutely essential. If your property is damaged or destroyed by a natural disaster such as a fire, flood, or storm your home insurance will protect your investment. When you purchase home insurance make sure that you are aware of what is covered and what falls outside the boundaries of your policy. For instance, the home itself is covered but what about the rest of your property such as a swimming pool, tennis court, garage, or the walls around your property? Home insurance can protect your entire property and not just your residence, so make sure that you get an insurance policy for your home that is tailored to your specific needs. When you apply for a home loan with a bank or other lending institution one of the prerequisites before they give you a bond is that you have sufficient home insurance. The banks cannot take the risk of owning an asset that is not insured, because in the event of a catastrophe they want to make sure that they can recoup their loan. Interestingly enough, tax law in South Africa proscribes the conditional sale of insurance, but an exception to this law occurs when banks lend you money to purchase a property: in this anomalous case the bank has the right to make it a condition of the loan that you take out the necessary home insurance. Banks can even dictate which insurer you use for the policy. This last point is important. Choose your bank and your insurer wisely, and find out exactly why the bank recommends certain insurers and not others (is the bank and the insurance company owned by the same holding company? Is the bank gaining by recommending a preferred insurance supplier, or do they have your best interests at heart?) If your home is owned as a sectional title property it is highly likely that the home insurance premium is already included in your levies, as a sectional title property tends to include home insurance coverage, which is a nice perk. When homeowner's purchase insurance they make a number of common mistakes, and these oversights can end up being extremely expensive. Remember that the obligation lies with you to know exactly what is covered in your policy and what is not. Homeowner's insurance rarely, if ever, provides total cover in the event of property damage or destruction. What we mean is that your policy will tell you in a detailed fashion exactly what it does cover, and you cannot assume that every eventuality has been included. It is up to you to find out what is excluded from your coverage, and you will always find this in the fine print. The old cliche of always reading the fine print probably originated with insurance policies, and it remains an invaluable caution. Don't be a policyholder who finds out too late, namely after the damage is done, that the event in question was excluded from cover. Furthermore, when a claim is submitted to your insurance carrier the obligation is yours to prove that the damage to your home was the result of an event covered by your policy. In some cases such as hail damage or a more substantial natural disaster this is easily sorted out, but be aware that the insurer may deny your claim based on the homeowner's negligence or by proving that the damage to your home was caused by a lack of maintenance or the age of the structure. Insurance companies are well within their legal rights to do this, and you should never blindly assume that your policy is going to take care of anything that happens to your home. It is also your responsibility to keep track of rising prices that may affect the value of your property. The value of the property itself is likely to increase, and with that you need to be aware that the costs to repair that property are going to get higher over time. The original valuation of your property, which the insurance company uses as a basis to pay out coverage, may not cover you down the line. If it costs more to fix the property the insurance company is not going to make up the difference for you, and you could be out of pocket. In order to prevent this you must regularly update the value of your property as well as the estimated costs that would be incurred in order to repair that property. These revisions must then be factored in to your home insurance, which needs to be updated with some regularity. There are certain insurance companies that automatically build in an increase in your home insurance, but this amount is subjectively applied across the board and might not be sufficient for your individual property. Once again, do not expect the insurance company to be proactive here. The responsibility is yours to update and increase the amount of coverage you think you will need for your home. Related Insurance Articles: * Check Your Cover First Time Insurer * Lloyds TSB Insurance * Insurance Tips * South African Vehicle Insurance * Household Insurance-Insurance For What Is Inside * Short Term Insurance * Car Insurance-Why you cannot be without it * OUTsurance Insurance 
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