Floods, fires, hail, high winds… the past few months has repeatedly shown just how suddenly and rapidly properties can be destroyed by natural disasters – and leave uninsured or under-insured owners exposed to huge financial loss, on top of the devastating loss of their homes and possessions.
“These tragic situations underline the necessity of taking it upon yourself to check regularly that your home is insured at full replacement cost, and for all eventualities,” says Gerhard Kotzé, MD of the RealNet estate agency group.
“Most homeowners who have a bond also have home owners’ insurance (HOC) through their bank, but they should not just assume that when the bank adjusts the premium from time to time, this change will necessarily mean that they are fully covered.”
Full coverage, he notes, should not exclude any sort of disaster, including earthquakes and ground subsidence, and full replacement value should include the cost of any demolition that may be necessary as well as architect and town planning fees, for example, as well as the actual cost of rebuilding the structure at current construction rates.
“If this amount has not been correctly calculated, and you are thus under-insured in the event of a catastrophe such as a flood or a fire that razes your home to the ground, your insurance policy will not pay out enough to replace it as it was. And if the structure suffers partial damage, your policy will also only pay out a pro-rata amount - in other words, if you are 30% under-insured, the insurer will only pay out 70% of whatever claim you make.”