The Football World Cup is less than 3 years away and South African property owners have spotted a potential gap in the market as a shortage of accommodation is likely with over a million tourists expected.

There are already advertisements in South African newspapers and radios calling for homes to be registered as accommodation for 2010.

But, the party tenants could cost property owners as their risk profile increases as soon as the property becomes income earning.

"There is the genuine chance there will be damage to the house or its contents that will only be discovered after the renting party has disappeared back to their country of origin," says Craig Young national manager of short term insurance at MortgageSA, South Africa¿s leading bond originator that places one in five South Africans in their homes.

Even if the property owner insists on a deposit, this may not be sufficient to cover the damage caused and, because of the change in risk profile, insurers may not be prepared to pay," warns Young.

Football fans cause hundreds of thousands of rands worth of damage to property and the sport has a history of hooliganism. There has been an average of 3350 arrests in England in the past five seasons as a result of violent behaviour and property destruction.

As a general rule tenants do not look after properties as carefully as owners and, fuelled by alcohol, destruction to property becomes inevitable.

"If you decide to rent out your property for the 2010 games property owners should make certain they have the correct insurance in place," cautions Young.

"The consensus amongst home insurance advisors is that your ordinary domestic insurance policy will not suffice," says Young.

"We strongly advise that property owners inform their insurers well before the tenants are due to arrive," says Young. "They will review the policy for the duration of the tenants stay and underwrite the risk appropriately.

"If the owner fails to inform their insurer they will most likely incur a hefty penalty should they claim for damages after the tenants have left.

"While renting out your own property for the 2010 games may appear to be a lucrative scheme the party tenants may cause more damage than profit," says Young.

"It is also worth noting that as soon as a property owner is earning an ongoing income from their homes, there is an increase in risk profile and their risk moves to be a business risk, much like a Bed and Breakfast," concludes Young.

Taking a contractor's liability and building insurance while renovating a house is often the best way to stay fully insured. Because of the high risk involved during renovations insurers are likely to freeze certain parts of their normal cover.

South Africa's property market has remained consistently buoyant over the last five years, and home owners wanting to cash in on this phenomenon are giving their houses a face-lift as a way of increasing value.

Craig Deats, National Insurance Manager at Mortgage SA, says "Home owners should protect their assets during renovations by having a contractor's liability agreement run concurrently with a building insurance policy"

Deats cautions home owners to be 'mindful' that insurers freeze liability on certain parts of household insurance because they maintain that any damage resulting from the renovations should be the sole responsibility of the contractor. The cost of repairing damages resulting from renovations can run into thousands of Rands, it is important for the homeowner to investigate the terms of the insurer¿s contract and to ascertain whether or not the liability stays active during renovations.

A renovation, in insurance terms, is any alteration to the current structure of the house which requires the expertise of legitimate contractors. For example building a new room, building a new kitchen, installing a swimming pool or an extension to an existing part of the house.

By placing both the contractor¿s all risk and building insurance in motion while renovations are taking place, the homeowner can rest assured in case an unexpected calamity occurs, that the claims are not rejected.

"The home owner will be provided with recourse where third party liability is concerned, for instance, if a builder trips over electrical cables, dislocating the electrical network system, the client will be fully covered and is protected against any claims that may be declined by the contractor" says Deats.

The Building insurance policy stays inactive until renovations have been completed. However, it's important for the owner to clearly indicate to the insurer that work has been completed and to specify the volume of such work to ensure that the insured sum insured is readjusted to the correct new value.

The debate over the National Credit Bill has brought into focus the confusing issues around home insurance which often leaves homebuyers overpaying for insurance - or even paying for products they don't need.

Rhys Dyer, Insurance Director at MortgageSA, South Africa's leading home loan originator says, "The National Credit Bill has brought to the fore the likely changes to the sourcing of compulsory homeowners insurance ¿ insurance that covers the bricks and mortar of the property. And, although there is no law making homeowners insurance compulsory, most banks make it a condition of the loan to secure themselves.

"However when the new National Credit Bill is enacted ¿ within the next few months - homeowners will be quite within their rights not to accept the bank imposed insurance and to rather seek a cheaper rate elsewhere possibly saving them up to 30%."

Dyer says life insurance associated with homeloans is another issue that buyers find confusing.

"Certain bank homeloan products have life insurance covers automatically included and banks often make the granting of a homeloan conditional upon the buyer signing a life insurance policy. While banks can insist that a client take out life cover in order to obtain a bond, they can¿t insist that you use their products ¿ you have free choice as to the product, intermediary or insurer you wish to use to provide the cover required by the bank."

"Buyers should therefore be aware of their rights to free choice when it comes to taking out a homeloan, where the banks require conditional insurance cover. Even if you have an existing bank policy, you should be encouraged to discuss your cover with your broker to ensure that it is the most appropriate cover for you. Pure life cover products have changed significantly over the past few years, and you may find that more appropriate products are now available to provide cover for your bond.

Dyer advises that it is a good idea to prepare for the possibility of being unable to pay off a homeloan due to death or incapacity, but urges buyers to consider all their long term insurance options.

"While individual life cover is a good option, many buyers could cover their homeloan risk as effectively with a Mortgage Protection Policy (MPP). Life insurance covers the risks of general income loss; whereas MPP covers the specific risk associated with homeloan debt and is matched only to that particular liability.

"An MPP policy can be as competitive and has the benefit of no medicals being required to obtain the cover. MPP policies also offer alternative covers, not normally offered in the traditional life insurance market, such as retrenchment cover, which will pay your bond installments in the event of you being retrenched from your job.

Another insurance issue that is often overlooked is when a buyer takes occupation of a house before transfer has gone through.

"A buyer should realise that the seller is still liable (as legal owner) for any damage to the bricks and mortar of that property although not for the household contents of the new purchaser.

"It¿s only when transfer goes through that the risk of loss or damage to the building passes on to the new owner."

As regards your household contents and motor vehicles, Dyer stresses the importance of advising your short term insurer that you are moving, to ensure that you are fully covered in your new home.

"Insurers will have to review the premium under your policy to reflect the new area in which you live, the security arrangements in your new home (burglar alarms, bars, fences etc) and whether your car will be parked in a lock up garage or out on the road.

"If your household contents and motor policy are not amended to reflect your new circumstances, there is a real likelihood that claims will be declined."

Finally, Dyer warns that if one needs to insure their home contents while being moved in a removal truck, they shouldn¿t automatically take up the policy offered by their furniture removal company.

"Many household contents policies already contain a level of transit cover. This may be a benefit you are already paying for in your existing household contents policy."

A 'blindspot' in the homebuying process is leaving South Africans millions of rands out of pocket because they wrongly assume they're covered against the risks of moving.

Mark Hershaw, National Manager: Short Term Insurance at MortgageSA, says that many people don't bother to take out transit insurance when moving their household goods - even when they're offered cover by their movers.

But Hershaw warns that the carrier of household goods is not entirely responsible for losses, although many people just assume they are.

"Lots of people see it as pretty low risk so tend to take the chance with their belongings. Others aren't even aware that transit cover exists.

"But moving without it could be a costly mistake when you consider it only costs a comparatively small amount to get peace of mind cover for hundreds of thousands of rands worth of carefully chosen and sometimes sentimental home furnishings.

"Transit insurance is as important for those moving across town as it is for those doing a major move across the country.

"We always encourage people to see it in the same light as getting behind the wheel of a car without insurance: a risk just not worth taking."

Hershaw says that vehicles carrying homeowners' goods are typically at risk from fire, highjacking, road accidents and theft. Transport companies also often face unexpected delays.

"And when you add up these loss factors, South Africans are needlessly forking out millions of rands each year for losses that can be insured against."

" Transit insurance also covers people¿s belongings for a period up to two months if they have to place them in storage.

Hershaw says that transit insurance is easy to acquire and should be seen as a 'necessity' for people moving home.

'We have growing numbers of clients buying transit insurance from us because it's so quick and easy and can be done at the same time as searching for home financing.

Hershaw also points out that being able to offer a transit insurance product makes for a sound strategic fit for MortgageSA because their business model is based on removing the hassle and paperwork for consumers and streamlining all aspects of the home financing and insuring process.

Financial freedom doesn¿t mean you have to win the lottery or a get an unexpected call from the executors of a long lost uncle¿s estate in Provence.

Ian Mcdonald, National Manager of Financial Planning at MortgageSA, says that most people mistakenly think that more money is the only way to financial peace of mind.

"But the truth is that it is good habits and sound planning, rather that exceptional cash flow, that makes for a sound financial future too."

Here are 3 steps to achieving fiscal serenity:

1. Pay off your debts

"First, make a list of all your debts," advises Mcdonald, "and then determine how much interest you are paying on each of them.

"Pay your debts off in order of the interest by settling the highest interest bearing debts first.

Mcdonald says that drawing up a budget every month will provide a stark review of your income vs. expenditure.

"If you spend more than you earn, you will never reduce your debt. Use any spare cash you have to pay off debts until they are gone. It¿s important to use a budget to make provision to retire debt-free and then spend on other items, not the other way round.

"Once debt is clear, then people should start a savings plan."

2. Make tax work for you

"Why pay more tax than you need to? Especially when the tax man will pay you to save," notes Mcdonald.

"Make sure you are benefiting from the tax deductions available for saving towards retirement.

"We are all entitled to this benefit, the levels of which depend on whether you currently belong to an employer sponsored Pension / Provident Fund or not.

Mcdonald advises people to have a detailed Financial Needs analysis done by an accredited Financial Advisor.

"The purpose of this will be to give you a realistic perspective on whether you will meet your financial goals in the short term or long term and should you become the victim of unforeseen circumstances, you will know whether your bank balance will handle it."

Mcdonald says this should be a regular occurrence. Amongst other things the Financial Needs Analysis will include an analysis of how much cover you require to protect the lifestyle of your dependants should you die or suffer a disability or illness which renders you incapable of working either for a period of time or permanently.

3. Provide for your family

The final step is to prepare for you dependents¿ financial stability through life cover.

"People should ask themselves how their families would live if their source of income was switched off tomorrow."

Another important process in this step, Mcdonald advises people, is to remember to review the beneficiary clauses under your life cover policies during the financial needs analysis.

"Assets you might want to go to certain heirs may also get caught up in the estate ¿winding-up¿ process and could even be sold by the Executor to meet liabilities and costs. An estate can take up to 18 months to be wound up and no doubt beneficiaries would suffer.

"It¿s a terrible predicament which could be so easily avoided.

"If properly constructed the proceeds of the life policies will pay directly and immediately to the nominated beneficiaries and avoid being reduced by Executors Fees.

"People need to update their wills for the same reason.

"Again, a simple solution solves a potentially huge predicament."

Mcdonald points out that a Financial Needs Analysis will also highlight whether someone is over-insured.

"Recent changes to Estate Duty and Capital Gains Tax on death mean you might possibly require less cover now than you did last year.

"Why should people pay for more cover than they need?"

After analyzing recent research, MortgageSA today advised potential home-buyers to carefully consider both the location and structure of any house they are considering buying.

Craig Deats, National Insurance Sales Manager at MortgageSA said research conducted by the company showed clearly how these two critical factors can have a major impact on your ongoing monthly costs, which amortised over the length of a home-ownership can run into tens of thousands of rands.

"While most homebuyers understand the value of getting the most affordable bond, what many don't realize is that a house comes with a number of ongoing running costs. Central to these is insurance on the structure of the house which is called buildings insurance, and insurance on your household contents.

"Both are impacted by where you live and what materials have been used in the construction of the house," he said.

Deats cited the example of three houses with a building value of R 1,5 million and a household content value of R 500 000. In the first example the houses are located in different parts of the country, in the second in different parts of the same larger metropole.

Example 1

Located in Roseglen in Durban, Claremont in Cape Town and Linksfield in Johannesburg, the three houses returned a different set of premiums for both buildings insurance and household contents.

The Roseglen, Durban house?s buildings insurance premium was 29% cheaper than the equivalent in Linksfield, Johannesburg, followed by Claremont, Cape Town with a 27% difference in premium to that of Linksfield.

On the household content insurance premium Claremont, Cape Town fared best with an 18% lower premium per month and Roseglen, Durban next at 14% less than the Linksfield, Johannesburg house.

Deats also pointed out that aesthetically pleasing aspects and finishes to a house can cost you.

"When we changed the structural specifications on the Linksfield house from standard ? tile, roof and brick ? to non-standard consisting of timber frame walls and a thatch roof the premiums jumped dramatically.

"The buildings insurance monthly premium rocketed by 454%, while the premium on the household content insurance doubled," he said.

Example 2

Deats said the MortgageSA research revealed a similar pattern in price differentials on insurance premiums between different suburbs.

For example, taking three houses all with a building value of R 1 530 000, household contents value of R 500 000 and each with one motor car worth R 187 000, but located in Stellenbosch, Tyger Valley and Greenpoint your total all risks monthly insurance premiums including personal legal liability and policy fee would be between 80% and 102% more in Greenpoint, compared to Tyger Valley and Stellenbosch.

Although the premium for the building value of R 1 530 000 was a consistent across the three locations, the difference occurred in the premiums charged on house contents and the motor vehicle.

"If you have a couple of potential houses in mind, it's worth doing this kind of homework before making your final choice. It could end up saving you thousands over the length of your home-ownership," Deats said.

MortgageSA, South Africa's pioneering bond originator and former winner of the non-listed company of the year, has launched its own building insurance product aimed at providing homeowners choice, and an alternative to the bank products that have traditionally been forced upon consumers.

Rhys Dyer, Executive Director at MortgageSA, says the move was facilitated by recent FAIS Ombudsman rulings and the new National Credit Act that was tabled into law in June 2006, which now allows the consumer the freedom of choice when it comes to house structure insurance.

"Buildings insurance is a compulsory condition of the granting of the home loan and homebuyers have historically been forced to swallow the bank?s prices if they wanted finance".

"But homebuyers are now no longer obliged to make use of the product prescribed to them by the bank and can therefore choose where they want to purchase buildings insurance and be free to shop around for the best value.

"This freedom of choice will give homeowners great savings, with premiums available in the open market often significantly cheaper than the rates offered by bank insurers and in many cases with more comprehensive risks covered."

Dyer also points out that being able to offer buildings insurance makes for a sound strategic fit for MortgageSA because their business model is based on removing the hassle and paperwork for consumers and streamlining all aspects of the home financing and insuring process.

"It dovetails with our home loan, mortgage protection and household insurance offerings and takes us closer to a one stop, personal finance product and advice platform.

"We hope that like the advent of bond originators, which have to date saved homeowners billions through increased competition, the introduction of free choice around buildings insurance will also result in massive savings for consumers. We estimate that the increased competition in the market will save homeowners R650 million annually in premiums.

"The cost of bricks and mortar insurance is going to be cheaper as the days of the building insurance pricing monopoly historically enjoyed by the banks are over."

Dyer says that while buildings insurance typically covers risks to the immovable structures of a residence and its domestic outbuildings, including all the fixtures, fittings and the improvements thereon, consumers should be aware that there is a lot of variability in what risks are covered.

"For example, subsidence and landslip cover is specifically covered by some insurers but often excluded on other policies. The same can be said for geyser wear and tear cover."

As interest rates crept up again this week, many people are feeling the financial pressure and creating extra funds in their budgets by cutting out insurance cover ? a practice that could leave them in financial ruins.

Craig Deats, National Insurance Sales Manager at MortgageSA, South Africa's leading bond originator and provider of insurance cover for all matters property, says that generally South Africans tend to have a 'negligent knee jerk reaction' to higher rates and often don't consider the full impact of their choices.

"Looking at the history of behaviours on our insurance portfolio, we can certainly say that there is an increase in the number of people not paying their insurance premiums in hard times.

"Human nature is such that general luxuries are not first off the budget list, but rather certain insurance policies because they are perceived as grudge purchases to start with. People seem to be willing to take a risk. But that could become a real problem should they need to finance a loss out of their own pockets at a time when they are feeling the pinch anyway.

"Should something go wrong when they have no cover, it's a double whammy of financial hardship that could be ruinous." Deats says that typically, household insurance and life cover are the monthly expenses that people skimp on when they are feeling a financial squeeze.

"People believe that they need DSTV, dinners out and other tangible consumption and tend to feel things like insurance cover are only for seemingly unlikely events so tend to stop paying. "The risk seems to be small and the reality is the chances of something happening are actually small but the repercussions could be life changing for yourself and your family should you need cover and not have it."

Deats says though it is a basic tenet of sound financial planning to keep paying insurance premiums and cut costs elsewhere. "People should draw up a budget and take a long hard look at discretionary expenditure, particularly on luxury items. That's what needs to drop off the budget first.

"It's also a very opportune time to get new quotes because you may have been paying too much for premiums. It is often possible to negotiate lower premiums especially if your circumstances or lifestyle has changed."

Deats notes that if people are correctly engaged by their properly qualified financial planners, the necessity of maintaining insurance despite the financial pressure would have been understood and they would know that policies can't be cancelled. "Would you cancel your car insurance or medical cover if you were cash flow strapped"

"Not likely, because generally we understand the importance of these covers as well as the risks of not having them. However when it comes to life cover and household insurance, the benefits seem so far off and the risk remote so we take needless risk."