Home insurance: your easy to understand guide

Leigh Leigh
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Buying a house is a big deal—probably one of the biggest deals that you'll have make in your life. Not only is it a huge investment but it is a costly one packed with strategic decisions, hidden expenses and often, a loan.

Owning a home is one of the most incredible experiences, however. It's a place for your family to live, love and grow and a space where everything is your own. You can build a deck, paint the walls whatever colour you want and drill a thousand holes in the wall, if you really want. It's yours.

When laying out such a large amount of money and investing in something as momentous as a house, you want to make sure that you're insured. This isn't always as simple as it seems. 

Follow us on an insider's walk-through guide of home insurance so that you gain a little bit of understanding of every aspect before you go about insuring your own home.

Residential building insurance

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Residential building insurance sometimes can seem like an unnecessary cost, especially when you've already forked out a huge amount for transfer fees, a deposit, rates and taxes. However, by investing a little bit each month into residential building insurance, you can guard yourself against even the worst of possible scenarios.

Residential building insurance exists for a variety of reasons, which all relate to the actual structure of your house. An example is if your house hasn't been built properly or wear and tear occurs, leaving you with leaks, water damage and other repair costs.  Another example is damage to the structure of your home due to burst water pipes or geysers.

This is also important in South Africa in terms of crime. If someone breaks into your home, damaging windows, doors or other parts of the structure, residential building insurance will cover this.

Depending on your cover, this type of insurance can also go towards fixing features of the house such as garage doors or swimming pools. There are many residential building insurance providers in South Africa so approach a few to compare quotes. Ultimately, you want to know that you are protected if anything happens to your house, including that you have emergency accommodation if you are unable to stay in your house due to structural damage.

Homeowner's insurance policy

A homeowner's insurance policy is an insurance policy to the value of your home. It is designed to cover the cost of builders should anything happen to your house. Most banks will insist that you have homeowner's insurance when you take out a loan. This type of policy will also cover damage to the structure of the house, as mentioned above, including burst geysers or broken toilets. 

There is also homeowner's content insurance, which protects the possessions in your home such as bicycles, jewelry, tablets and phones. If there is a break-in and all of your possessions are cleaned out, homeowner's content insurance will cover everything that was stolen as long as there is proof of forced entry. This is incredibly important, especially in South Africa because without it you could risk losing possessions that add up to a huge amount of money.

Homeowner's content insurance requires you to list all of your possessions as well as their value. Depending on how many items you'd like to insure and their value, you will be given a quote for a monthly homeowner's content insurance policy plan.

This is a must for everyone, protecting you from losing your television, clothes and any other valued possessions.

Insurance against elemental damages

What happens if your house catches alight or is damaged in a flood? What happens if your whole house burns down? Or if heavy hail or wind damage your windows?

Imagine losing this beautiful home, designed by Cristina Menezes Architecture, to a natural disaster.

This is why residential building insurance is so important, covering the cost of damages in the event of a natural emergency. The last thing you need to worry about during the trauma of such an event is how you are going to afford to pay for the fixing of broken windows or a damaged or destroyed structure. 

The most important thing to remember when getting insurance is to ensure that you are in fact covered against elemental damages. Read through the contract very carefully and speak to your broker about any fine print that may be included. Ask about all of the possible scenarios—it's better to be too cautious than too casual.

Liability insurance for house and land owners

If you own a house and someone slips and falls down your stairs, you want to make sure that they don't sue you for it. Likewise, if a wall collapses onto someone else's car. Liability insurance, in other words, protects you from being held liable for any claims brought against you that occur on your land.

In America and the UK, as well as other parts of the world, liability insurance is incredibly common. Home and land owners are very cautious of being sued and so they make sure that they are covered no matter what. In South Africa, it's less common but is still incredibly important. Most insurance companies embed it in household content insurance, homeowner's insurance or residential building insurance.

It's important to make sure that you do have liability insurance included in your insurance policy because if you are found liable for an incident such as damage, injury, disability or death on your property, you could be forking out millions and millions of Rand.

Legal cost insurance

Following on from liability insurance, another important factor to consider is lawyer's fees. If someone does sue you, how are you going to afford to battle it out in court? It's a homeowner's worst nightmare but there is a way to keep yourself safe.

Legal cost insurance makes sure that if a civil suit is bought against you or if you are charged criminally, you will be represented legally for a certain amount. Some legal cost insurance also covers representation should you die, ensuring that someone is present at your post-mortem or any other investigation into your death if the death is suspicious or unclear.

Depending on how much you're willing to contribute each month towards legal cost insurance, legal costs up to a certain amount will be covered. Double check what these amounts are and settle on a reasonable amount.

Legal bills can rack up incredibly quickly, causing tons of stress and all sorts of headaches. Having legal cost insurance wipes away all of this, keeping you protected and represented no matter what happens. 

Residual debt insurance

Residual debt insurance protects your whole family should something happen to you, ensuring that your home loan payment is covered up to a certain amount. This means if you were to pass away, your family wouldn't have to worry about paying off the home loan without your salary or contributions.

In South Africa, residual debt insurance is often referred to as a home loan protection plan. Standard home loan protection plans will cover home loan payments up to around R1 million or bond installments for between six months and a year. These home loan protection plans kick in for death or disability as well as retrenchment.  

It's always important to consider your family in the event of death, disability or dread disease. Ensuring that there is contingency plan for your home loan is a factor to consider. 

It's scary and rather unpleasant to think about all of these factors but once you've got the insurance sorted, you can relax with the knowledge that everything is safe and secure and that you and your family are protected, no matter what uncertainties come your way.

In the market for a new home? Check out these Nine Amazing Modern Houses.

Do you have any good tips regarding home insurance in South Africa? Please do share them with us in the comments!
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