Your house is in all likelihood your most valuable asset, so it is vital that you have sufficient coverage for your property in terms of insurance. A comprehensive short-term insurance policy can be taken out to protect both the value of your entire home structure, as well as its contents against unforeseen circumstances, such as fire or flooding. Depending on the age and condition of your home, and where you live, the cost of insuring your house can vary significantly, just as under insuring your home could have drastic consequences should it burn down.
Generally, when applying for a home loan, the bank requires you to take out Owner’s Comprehensive Insurance, which will cover the replacement cost of the property as a consequence of any unforeseeable event that should occur.
Find the Right Policy
If you choose to not take out insurance with the bank that is funding your home loan, or have paid off the home loan and want to change insurance companies, research your options and choose a reputable company that has a good track record with a variety of policies to offer. Make sure the policy offered to you is transparent, suits your needs and that you understand all the small print. Be aware that insurance agents often include a commission, so make sure the policy gives you value for your money and falls within your budget, and look out for the exclusions (what’s not insured).
Owner’s Comprehensive Insurance
The terms of most Owner’s Comprehensive Insurance policies provided by banks should cover the following:
- Burnt geysers and resultant damage thereof;
- Damage to permanent fixtures and fittings, such as baths, toilets and fitted kitchens, bedroom cupboards, and interior decorations;
- Exterior property, such as garages, greenhouses and garden sheds, boundary walls, fences, gates, drives and swimming pools
The policy should also provide alternative accommodation if your home is rendered uninhabitable due to an unforeseeable insured event occurring. (Courtesy: http://www.santam.co.za/manage-your-risk/personal-risk/buildings)
According to a recent survey done across South Africa, it has been found that it is almost 30% cheaper to buy an existing house than rebuild one. The experts encourage homeowners to research and consider the rebuild cost rather than the market value when insuring their property, as they may otherwise be left severely underinsured following damage to their assets.
Calculating the real replacement cost of your home
The easiest way to calculate the value of your home or property is to use a buildings risk calculator. The calculator follows a number of steps, in which you need to insert information about the property, such as estimated overall value; details of the property etc. and the calculator will then work out a value of the property accordingly.