Make sure there’s no gap in your home insurance

You probably check on your car and household contents insurance at least once a year, but what about the policy covering damage to your home or its complete loss in the event of a fire, flood or other catastrophe?
If this has not been adjusted as the value of your home increased, you will most likely be underinsured, which means that any claim you make will only be partially paid out, and that if you lose your home to disaster, you may only be able to replace it with a much lesser property – although you will still have to pay off the home loan on the original home.
“With household budgets having been under severe strain for the past couple of years most people have sought to reduce their insurance premiums, not increase them,” says Hano Jacobs, CEO of the Realty 1 International Property Group. “And with property values having moved slowly during this time, it has simply not occurred to many homeowners that they may be at risk.”
However, he says, even small increases in value can make a big difference over time, as revealed recently in The Economist, which calculated that SA house prices had risen by an average of 456% over the past 13 years.
“So if you bought a home a few years ago for R500 000, say, the cost of replacing that property at today’s prices could easily have doubled and re-doubled to more than R2-million, taking into account the cost of demolition and clearing and professional fees as well as today’s higher building and finishing costs.”
Consequently, you really need to be sure you are adequately insured - and despite the fact that householder’s insurance is usually linked to a home loan account, it is your responsibility to check that the value of your property is accurately reflected in that policy and that you are paying the right premium. 
Says Jacobs: “When you bought the property and took out a home loan, your bank would most likely have insisted that you insured the home for what you paid, which, theoretically at least, was its replacement value at the time of purchase. The bank may also have adjusted the insurance and premium since then, but it may not know about improvements you’ve made to your home that would increase the replacement cost.
“It may also have applied a standard rate of increase, which would be insufficient if your home is in an area that has performed better than average. In short, in the absence of an individual valuation, your home could well be insured for far less than current replacement cost.
“Most certainly, it is well worth checking, before you find yourself having to cover the ‘gap’ between the insurance payout and the replacement cost, or having to pay off a loan on a home you no longer have.”
Issued by
Realty 1 International Property Group

  Comment on this Article

  Please login to post comments

Post to my facebook wall
Characters remaining

    Latest Property News
    • 23 Jan 2018
      Many people only start thinking about home-ownership when they are ready to “settle down” or start a family, which is why first-time buyers these days are generally in their mid-30s, compared to those in the previous generation who were usually in their mid-20s.
    • 22 Jan 2018
      Moving away from the city to a country or coastal town and a slower-paced life is a frequent new-year resolution for South Africans, but thorough research should be done before you break free from the hustle and bustle, because making the wrong move could turn out to be a very expensive mistake, and even more stressful for you and your family than staying in the “big smoke”.
    • 22 Jan 2018
      Cape Town is home to many breathtaking and historic homes, but House Invermark designed in 1969 by South African architect Gilbert Colyn, with inspiration from two modernist icons: the Glass House by Phillip Johnson and Farnsworth House by Ludwig Mies van der Rohe is in a class of its own.
    • 22 Jan 2018
      2017 was a challenging year for the South African property market in general, despite small pockets of thriving activity in areas like the Western Cape. As we head into 2018, Tony Clarke, Managing Director of the Rawson Property Group, casts his eye forward to property trends and market influences that could make their impact felt in the New Year.
    • 19 Jan 2018
      Extending from Randfontein in the west to Roodepoort in the east and including the towns of Krugersdorp and Magaliesburg, the West Rand has a plethora of property available to residents who choose to make this unique area their home.
    • 19 Jan 2018
      When it comes to financial planning, doing the work to ensure you’re prepared for unexpected emergencies is just as important as ticking off your other goals and New Year’s resolutions. The beginning of the year is also the perfect time to review your various insurance policies.
    • 19 Jan 2018
      No surprises at the first Monetary Policy Committee of 2018, as Reserve Bank Governor, Lesetja Kganyago, announced that the interest rates would stay at their current levels.
    • 18 Jan 2018
      The Southern Suburbs make up some of the most popular residential areas in Cape Town, comprising charming groups of suburbs which lie to the south-east of the slopes of Table Mountain. It is seen as the city's most expensive residential neighbourhoods with a choice of various private schools, upmarket eateries, wine estates, beautiful homes and trendy apartments.
    Subscribe to the MyProperty Newsletter

    Last Name  
    Email Address  
    Email Frequency
    Share this Page

    For Sale Property
    Rental Property
    More Options
    Connect with us