Get the most out of your homeowner’s insurance

Every property owner with a home loan must have home owner’s insurance in place. Your insurer wants to keep your house in perfect condition, so they should be the first person you call when things go wrong.

When you apply for a bond, its approval is usually conditional on you taking out home owner’s insurance. The purpose of this kind of insurance is to protect you – and the bank – from the risk of structural damage arising from fires, bad weather or burst geysers or pipes.

While you are not obliged to take the home owner’s insurance that your bank offers, it is usually compulsory for you to prove that you have this type of cover in place.

“Although this type of insurance is often a grudge purchase, once it is in place, it is extremely useful to the home owner,” says Craig Young, the managing executive of oobainsure, the insurance division of ooba, South Africa’s biggest bond originator. “Your insurer will become your first port of call in a household emergency.”

What do they cover?

Some of the less well known items covered by home owner’s insurance include: alterations to your dwelling should you become confined to a wheelchair, damage to garden caused by impact, emergency services expenses, appointing of guards to protect your property, replacement of keys, locks and remote control units, geyser wear and tear, electrical gate motors, cost of demolition fees and accidental breakage to fixed glass and sanitaryware. And the list goes on.

Of course, there are also exclusions. These generally include wear and tear or damage from civil unrest or war.

“Simply put, what it boils down to is that if anything goes wrong with your home, you should call your insurer before you do anything else, to find out whether you are covered,” says Young.

The claims process

To claim, he advises contacting your insurance company immediately so that they can guide you through the processes. All insurance companies have their own panel of service providers that they will send out to do the work. You can use your own service provider for the repairs in some cases, if this is agreed upon by the insurer and a quote has been accepted.

In an emergency, contact the insurance company’s emergency line for priority service.

Your excess will usually be required to be paid to the service provider – such as a plumber or electrician – before any work commences on your property. When the work is done, you will have to sign a document to let the insurer know that you are happy with the work.

“It is always advisable not to take matters into your own hands with any emergency repairs,” says Young. “Always phone the claims call centre as your insurer cannot be held liable for inflated prices charged by an independent service provider.”

Valuate your property annually

It is also a good idea to always keep your property evaluation up to date. The insurer will increase your premiums annually, taking inflation and building materials costs into consideration, but it is up to you to request a reassessment of your property if you have carried out any renovations.

“The main sum insured should be adjusted on renewal each year to allow for changes in the value of the property and the cost of rebuilding the property,” says Young. “Obviously, if you have done any work on the property, call an expert evaluator from your insurance right away.”

He explains that if you don’t do this and you need to claim, you could be underinsured. This means that you would be liable for the costs of a rateable share of the damage. “For instance, if the replacement value of the property is R100 000 and the insured value on the policy schedule is R75 000, then the insurer would be within its rights to only pay a maximum of 75% of every claim you make. For this reason, you must ensure that your property is correctly insured.”

You are required to have home owner’s insurance in place to protect your lender’s interests just as much as to protect yours. Home owner’s insurance is there to help you to protect the value of your greatest asset. “So use it when you need to,” concludes Young.