(File photo) Cover your property for fire damage. Picture: EPA/FRIEBE

Deciding to buy a home is a big, albeit exciting, step to take, with a number of factors to be considered.

One of the most important is home insurance and considering the investment made on the property purchase, buyers need to ensure home and contents are sufficiently covered in order to avoid costly surprises in the event of loss or damage.

Johan van Greuning, head of Standard Insurance Limited at Standard Bank explains home insurance covers the structure of the home, as well as any outbuildings on the property; household contents insurance covers more personal items.

Both will cover the property where damage is caused by fire, lightning, explosions, storm conditions or earthquakes and will also protect a property against damage caused by, for example, burst pipes.

However, unlike home insurance, Van Greuning says household contents insurance is not compulsory.

“In the event of a man-made or natural disaster, burglary, vandalism or malicious damage, the cost of the damaged or stolen items adds up quickly and it can be unaffordable for most people. Household contents insurance covers the cost of all personal possessions, carpets, furniture, electronics and so forth and having a good insurance plan in place can help you get straight back to where you left off, in a material sense.

“Home insurance is compulsory while a mortgage loan is registered over the property, but since this is your biggest asset, it is strongly advisable you keep your property insured even after you have repaid your mortgage.”

Van Greuning also explains the value a home is insured for does not reflect the market value of the property, but represents the amount it will cost to rebuild the entire house following complete destruction by fire.

With regards to home content insurance, Graham Craggs, spokesman for Budget Insurance, says this should include loss of, or damage to household goods and personal possessions the owner and all their family members who live in the home have inside the home or the outbuildings.

Buildings insurance, however, should include, for example, loss of, or damage to, your private home, garages, outbuildings, swimming pool, walls, gates, fences, tennis court and for the fixtures and fittings at the address on the policy schedule, he adds.

According to Robyn Farrell, executive head of 1st for Women Insurance, home owners should also consider portable possessions or all-risk cover, which allows policy holders to claim for stolen, lost, or damaged items they usually carry around with them, such as jewellery.

“The replacement value of goods is what it will cost you, at the time of a claim, to replace all your belongings with similar brand-new ones. These values change over time and if the policy is not reviewed and the higher replacement value is not taken into account, cover becomes inadequate,” she says.

It is, therefore, important to update household inventory lists on a regular basis.

“Don’t underestimate the cost of replacing items to try and lower your monthly premiums or, similarly, avoid overestimating replacement values,” Farrell warns.

But making sure one has insurance to cover the listed property and possessions is only part of the equation, as owners also need to ensure the property and items within it are as secure as possible.

This can mean installing burglar bars, security gates and armed and alarm systems.

“Customers must consider the implications and hardships associated with any losses or damages they can suffer.

“On average, one-fifth of customers experience losses on an annual basis and they receive claim settlements of 75 percent of premium payments from all customers. This illustrates how severe losses and damages are which customers suffer and just how difficult it would be to try to self-insure against such losses.”

DID YOU KNOW?

The value a home is insured for does not reflect the market value of the property, but represents the amount it will cost to rebuild the entire house following, say, the complete destruction by fire.

Independent HOME