New home? Here are some tips to save on your insurance
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By Dominique Bowen
Property is becoming more accessible to younger people, with under-35s dominating first-time homebuyer figures, and homes are evolving into a hybrid of work and leisure spaces as more companies adopt a flexible way of working.
Rawson Property Group sales for 2020 show more than 42% of sectional-title buyers were under 35, and just over 36% of sales of freestanding properties were by the same age group.
With what is arguably the biggest purchase in your life comes the responsibility of keeping the property secure and in good condition – not only to enjoy it yourself, but ideally to pass on an asset of greater value if you choose to sell it or leave it to loved ones one day.
While you need household contents insurance on your possessions within your home, if you’re about to own a home you also need building, or homeowner’s, insurance, which protects the actual structure of your home. It's a requirement when you take out a bond on a property.
Where property value is concerned, Hannes Smith, Old Mutual Insure executive for alternative business solutions says there’s a common misconception among property buyers when it comes to understanding a property’s replacement value. “Building insurance works on replacement value, not market value,” he says. “Calculate the replacement value in the event that there is a total loss of your building – for example, fire brigade, demolition and architect costs, plus building materials and labour. Take out cover for that value and not the market value of the property,” he says.
Deirdrie Grové, director of Status Insurance Brokers, agrees, saying that when it comes to gathering quotes, you’re not obliged to opt for the insurance offered by your bond provider. “South African law allows a homeowner to contact other insurance providers for building insurance quotes,” she says, with the caveat that not all products are equal. “Some insurers’ premiums are a few rands more, but so much more cover is automatically included.”
If you have existing policies with one insurer, ask about bundling your home insurance with these. “Some insurers give further discounts on an entire policy for adding items and sections,” says Grové.
Being over- or under-insured are both problems for your pocket; while over-insurance results in you paying more than necessary, under-insurance has an effect only when disaster strikes and the dreadful realisation sinks in that perhaps you shouldn’t have skipped that last property check. “Check and calculate the replacement value of your house at least once a year to make sure you’re adequately insured,” says Smith.
If the cover you need doesn’t fit in your budget, explore how much excess you can afford to shoulder if you need to claim. “Ask to have a higher excess on the building section, which, in turn, will reduce your premium,” says Grové. Whatever figure you land on will be the damages you agree to cover from your own pocket before you claim from your insurer.
Check your roof (and more)
A home inspection before moving in can save you money in more ways than one. Grové says few people know the condition of the roof of the house they’d like to buy. “The number-one reason insurers may be justified in not paying building claims is due to a lack of roof maintenance,” she says.
Besides this, check gutters, walls and mould-prone areas.
“Such an inspection has a twofold cost-saving implication; one: you can get the seller to do any repairs at their own cost before the property is transferred (saving you thousands), and two: saving on any claims being put through an insurer, thereby reducing future premium increases or policy cancellations due to adverse loss,” she says.
Safe as houses
There are some regular enhancements you can implement to further reduce premiums on both your building and contents insurance. Having a fully functional alarm system installed is one. “Ensure the back-up battery for alarms, gates and fences is in good health,” says Grové. Especially in the colder months when loadshedding becomes more prevalent, your property can become a target for burglaries, so it’s even more important that your alarm is in working order when relying solely on battery power.
“Also unplug all appliances that were being used before the power outage to prevent them from turning on unattended when the power is restored,” says Grové. “This will also protect these items from electricity spikes or surges.” Consider installing surge protection equipment to reduce your premiums.
‘Your home is your castle,’ says Smith. ‘By taking care of it, it not only increases the value of your asset, but it also ensures that you meet the conditions of the policy for a valid claim.’
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