Home owners insurance provides cover against damages to the building, roof and fittings of the home that you own. It is also known as building insurance.
What is covered
Cover is generally provided for the:
- Building (including outbuildings)
- Fixtures and fittings
- Water, sewerage, gas, electricity and telephone connections (including geysers)
- Garages / car-ports
Your insurer will either replace, repair or reinstate (rebuild) the damaged property.
Make sure you know what you are covered for
- The policy will not cover damages to the building resulting from wear and tear or lack of maintenance or from faulty or bad construction or design.
- The policy will also not automatically cover damages to the house due to subsidence or landslip (the ground sinking under your foundations or the movement of earth around your house).
What are you insured against
Generally cover is provided for damage or loss caused by the following events:
- Fire, lightning, explosion
- Malicious damage
- Storm, wind, hail, snow or flood
- Earthquake and earth tremor
- Bursting, leaking tor overflowing
How much will the policy pay out?
Most policies will pay the replacement cost in proportion to the amount your house is insured for. Replacement cost is the cost of rebuilding the house to the standard it was before the damage. If rebuilding costs you R200 000 but your house is insured only for R100 000, your insurer will only pay R100 000 and you will have to pay for the balance.
Therefore, it is VERY important to ensure that the insured amount on your house is enough to pay for rebuilding and associated costs.
Don’t fall into the trap: Rebuilding cost is not equal to the value you would sell your house for – it is what it costs to rebuild what was damaged to the same standards, the same way and in the same place. When you are deciding how much to insure your home for, remember to include the all the costs of rebuilding your home. These could include:
- Architects fees
- Costs of demolishing the building and removing the rubble
- Costs to extinguish any fires
- Costs of getting building plans approved
Knowledge is power
Make sure you know what you are covered for, what is excluded and what to do to obtain the cover you require. Avoid surprises. Don’t bank on writing to the ombudsman when your claim gets rejected, you may lose. Prevention is better than cure.
Check your policy regarding liability cover. This covers the cost of injury to visitors in your home.