Home Insurance: Rebuilding SA’s economy starts at home
As South Africa and its economy continue to push on following the Covid-19 pandemic, taking care of your home should be at the centre of consolidating your own finances.
Owning a home is one of the most significant financial responsibilities one can take on. It is essential to make sure your property is not only covered in the event of loss or damage, but that you know and understand what value you are getting from your home insurer.
According to the International Monetary Fund (IMF)’s Financial Sector Assessment Program on South Africa, the insurance industry in South Africa is an important pillar of the financial sector and accounts for 18% of the country’s financial sector.
Having home insurance therefore is not only good for your personal finances in that you are covered in the event of an expected disaster, or you do not have to incur any out-of-pocket expenses, but it is also a contributor to the country’s economy.
Considering this, here are two things to know about why building insurance is so important for you.
What is building insurance and why do I need it?
Owning a home, whether to live in or to rent out, is a big step that requires finding the right partner to help you protect it. Part of that protection includes understanding what you are paying for and what you are covered for.
If you financed your home purchase with the help of the bank, you are legally obligated to have building insurance to help you pay back your bond should your home be damaged and needs rebuild or repair. Building insurance, unlike home contents insurance, protects the structure of your home swimming pool, paving, perimeter walls/fencing, etc. and covers loss or damage to things like your roof and walls should they be damaged by an insured event like floods or fires, etc.
The key to having good building insurance is making sure your home is not underinsured. Claims statistics from insurer Santam show that one out of three homes in South Africa is underinsured. This means that the sum your home is insured for is less than the cost of rebuilding, repairing or replacing your buildings and structures should something happen to it.
To help you see how much your home should be insured for, Santam has a quick and easy building calculator tool that helps you value your property to see how much building insurance you might need.
You do not have to take out building insurance from your bank or bond originator and can look for an insurer that best suits your needs.
What if I am renting my property out?
Renting out your property is a good way to earn extra income, but it does not come without its risks that need to be insured. Whether you are renting out your entire home or just a room, you need to get the right kind of insurance that will cover you should any damage to the property occur.
As a landlord, renting out your space in whatever capacity, it is vital to have insurance that covers you from risks such as your tenant being injured by the structure, i.e. falling because of a loose floorboard, or damage to their personal property caused by a burst pipe.
Santam’s Personal Lines policy provides limited bed and breakfast coverage for up to three rooms that you rent out on this basis while you are residing continuously on the property under the Contents section. Additionally, it covers your stock in trade, you need to conduct your business, up to the insured amount shown on your schedule.
Article with thanks to News24.