Homeowner's Insurance Explained

Your home is your sanctuary and often the most expensive purchase you will ever make. As recent events in KwaZulu-Natal have illustrated, having proper insurance in place to protect your most important asset is essential. 

While homeowners insurance (also called building insurance) is not a legal requirement in South Africa, most banks will require that a purchaser have this in place before the property is transferred into their name. The purpose of this insurance is to protect the buyer and the bank from the risk of damage to the building arising from unforeseen circumstances, such as extreme weather. 

What is covered by homeowners insurance may vary depending on who you choose to insure with, but generally speaking the following will be covered:

• Buildings on the property, including the garage and outbuildings.
• The swimming pool (but not the pool equipment)
• Walls, fences and gates
• Tennis courts
• Third party liability, so if someone is injured or dies on your property and you are held liable, you are covered

Some insurance companies will offer some lesser-known benefits, so it's worth comparing the fine print to make sure you get the best deal. Some of these could include:

• Alterations to the house should you become wheelchair bound
• Appointing of guards to protect your property if the boundary wall or fence is damaged
• Geyser wear and tear
• Loss of income should a tenant have to move out due to damage to the building.
• Cover of water heating systems such as geysers and solar panels
• Damage caused by falling trees
• Damage caused by wild animals - this is, after all, Africa!

The most important thing to remember is that homeowners insurance does have limitations. Don't wait until there is an emergency to find out that you are not covered - check your policy annually.

Homeowners insurance will not cover damage caused by lack of maintenance such as blocked drains or pipes collapsing due to rust. It is up to you to keep your home in good condition. Your insurance can also only cover the buildings it knows about. If you are extending or building a granny flat, remember to inform your insurers. They will, obviously, only cover buildings that have approved plans. Damage caused by strikes or riots is not covered. You would need to take out SASRIA cover for this, however, some insurers will do this on your behalf and add it to your premium.

You would need to have your property insured for its replacement value, which is different to its market value or purchase price.  Quality of the finishes, the type of construction and a host of other factors have to be taken into consideration when calculating your replacement value which in turn affects your monthly premium, which is why having a valuation done regularly is important. Over-insurance will not result in you being paid out more when damage occurs, and under-insurance will mean you will only be paid out a percentage of the costs to repair any damage.

At MaxProp we pride ourselves in our customer service and our agents are on hand to advise our new homeowners every step of the way, even when it comes to choosing your homeowners insurance.