INSURANCE - GRUDGE OR GRATEFUL?

Insurance is always somewhat of a grudge purchase...until you need it. But a solid, well-managed homeowner's policy on your property is imperative - here are a few hints to ensure yours works for you.

The KZN floods taught many homeowners a lesson or two about insurance, but for some, it showed up the inadequacies of their policy, the small print unread or, to be fair to the insurer, the financial shortcuts you took in the belief you'd never need all that insurance.

Buildings insurance covers the structure of your home as well as all permanent fixtures and fittings. If you experience an unexpected event like fire, flood and storm, you're able to file a claim to cover that damage. If you've insured well.  

Each homeowner's policy is potentially different. Different because it's not the same insurer or policy, and of course, you may want to save money by, for example, agreeing to an excess payment on every claim, or you might not quiz the insurer on what is covered and what not (or read the small print).

You can secure homeowner/building insurance cover from any accredited insurer, so it's wise to compare costs, benefits, reputation and service. Essentially, the building insurance you take out is almost customised to your needs, so it's worth putting in the work to ensure you're well covered. So, your geyser may be covered, but if you've had associated damage when it burst, are you covered for the loft/flooring/ceiling/tiles? And to what extent?

One of the key mistakes made by homeowners is underinsuring their property. The belief there, is that if you'd ever need to claim, you'd never need to claim to 'that full amount'. But it doesn't work that way - building insurance is calculated according to the cost of replacing old with new. If you are underinsured, you'll only get a percentage - that can leave you drastically short of what's required to repair/rebuild and so on.

It's imperative to insure your property for the full replacement value. Not only that, but you should examine your policy annually, get a current valuation, and certainly, if you've improved the property, adjust the amount insured. You need to ensure that the sum insured (replacement value) is increased proportionately with current building prices. There may be a significant difference between the actual replacement cost of the building and the market value of the property. Best bet is to get a certified valuations company to give you an annual update on what cover you need to rebuild your home and replace all the fixtures and fittings from scratch. Then shop around.

Do you have an excess amount to pay? It may sound fine when you agree to that in the policy, but often, if that excess is high, it makes it not worthwhile to claim.  

Does your policy have any exclusions? For example, there's a difference between a retaining wall and a boundary wall. A retaining wall requires an engineer's certificate, and it's often not covered by your policy if you don't have that - it might not even be covered at all. Do you know if it is?  

Update your policy annually - replacement values and construction costs traditionally increase year on year. Realistically, homeowner's insurance is usually subject to certain exclusions and excesses - just make sure you've covered yourself as best you can.