Advice and Opinion

Insurance tips for new home owners

Nazeer Hoosen, Executive: Short Term Insurance at PPS.

Purchasing a home for the first time can be extremely exciting, but this new asset also comes with additional responsibilities such as homeowner’s insurance. Nazeer Hoosen, Executive: Short Term Insurance at PPS, states that it is imperative for any individual 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 approved, a new homeowner must ensure they put the same effort into finding the appropriate insurance policy for their specific needs. As many people rent apartments or share houses for most of their early working years, they might have some knowledge about home contents insurance, but for many people homeowners insurance is a completely new area that they have to explore.”

Hoosen explains 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 extreme 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, he says. “One can claim for contents insurance in case of fire and floods as well, but contents insurance will also cover one’s 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.”

Should the consumer already have contents insurance in place for their 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, states Hoosen. “In some instances, the homeowner will be offered insurance from the company that granted their home loan, but it is important for the homeowner to consider other insurance providers and policy options.”

While it is good to speak to relatives and friends about their experience with their insurance provider it is still advisable to speak to a broker in order 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 finalized to ensure that the policyholder is not under insured. If at claims stage it is found that the home and contents are not sufficiently insured for the replacement value, the homeowner will be left with the financial burden of having to pay the proportional difference between the sum insured that is reflected in the policy and the actual replacement value”.

Lastly, Hoosen advises that it is of vital importance for the policyholder to completely understand their home insurance policy before they 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 the consumer will not face insurance claim repudiations due to not understanding what is covered under their chosen policy and what is not.”