Insurance tips for new homeowners

Buying a home for the first time can be very exciting, but this new asset also comes with additional responsibilities such as homeowner’s insurance.

Nazeer Hoosen, executive: short term insurance at PPS, says it is imperative for anyone buying their first home to ensure that they have a proper insurance policy in place to protect their newly acquired asset.

“After going through the process of saving up for a deposit, finding the perfect house and getting a mortgage loan approved, new homeowners must ensure they put the same effort into finding the appropriate insurance policy for their specific needs.

“Many people rent flats or share houses for most of their early working years, so they might have some knowledge about home contents insurance, but homeowners insurance may be completely new to them.”

Hoosen says that homeowners insurance can be divided into two parts: building insurance and home contents insurance, with the former covering the construction of the home like the walls, windows or a fitted kitchen.

“It is vital that consumers have building insurance as these structures need to be covered in the case of damage caused by events such as a fire, flood or storm. The policy will also cover theft and malicious damage to fixtures and fittings.”

Contents insurance will cover the belongings inside the home such as appliances, furniture and electronics.

“You can claim for contents insurance in case of fire and floods as well, but contents insurance will also cover your belongings in the unfortunate event of damage or theft. For these reasons it is strongly advised that homeowners have both building and contents as part of an overall home insurance policy.”

If you already have contents insurance in place for your belongings, it may be advisable to take out building insurance with the same provider as many insurers offer discounted premiums when the value of the policy increases, says Hoosen.

“In some instances, you will be offered insurance from the bank that granted your home loan, but it is important to consider other insurance providers and policy options. Although it is good to speak to relatives and friends about their experience with their insurance providers it is still advisable to speak to a broker to get optimal insurance at the best price,” says Hoosen.

“It is also imperative that a proper assessment is carried out before the insurance policy is finalised to ensure that you are not underinsured. If at the claims stage it is found that the home and contents are not sufficiently insured for the replacement value, you will be left with the financial burden of having to pay the difference between the sum insured that is reflected in the policy and the actual replacement value.”

Lastly, Hoosen says that it is essential to completely understand your home insurance policy before you sign the contract.

“Ask the insurance broker to explain any complex clauses and jargon to ensure complete understanding of the policy. This will also ensure that you won’t face insurance claim repudiations due to not understanding what is covered under your chosen policy and what is not.”

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