/ 5 May 2015

If your home is where your heart is, insure it

Coenraad De Jager
Coenraad De Jager

“Home is where the heart is” is a popular saying that rings true for most people, as they are willing to invest a lot of money when buying or building a home that is comfortable and suits their lifestyle and pocket. While it’s almost a given for car buyers to arrange for insurance on their cars, the question is whether homeowners are willing to pay the costs for insuring their houses against damage.

For homes that are financed, financial institutions require homeowners to insure their homes and the permanent structures attached to them. While banks offer homeowners insurance, it is not mandatory to take up the insurance with the financing institution. Homeowners can take up insurance with any other insurer, or even add the house to the existing cover they already have for their car — and this may even turn out to be more affordable.

Even when a home is not financed, homeowners should still take up insurance to ensure they are able to recover quickly in the unfortunate event of a fire, explosion, an act of nature, theft, owners’ liability, malicious damage or any other unforeseen disaster that can damage or completely destroy their homes.

People in rural homes should also not rule out the importance of insuring their homes, as they are exposed to similar risks. Insurance products such as Mutual & Federal’s Insurance 4 All cover are adapted for homes on tribal land; however, the house must be built of standard brick and mortar, with a tiled or zinc roof.

The benefits of insurance are not always top of mind for people whose homes are on tribal land, as their income does not always allow them to prioritise insurance when basic needs such as food are more important. This is why financial wellness education is important; financial institutions must educate consumers on the basics of home finance and insurance.

It is important for homeowners to check that their homes are insured for the replacement value, not for the purchase price. In calculating the replacement value, they should consider factors such as the cost to repair or rebuild the home at the time of the loss or damage with new materials, the cost of demolition, architects’ fees, quantity surveyors’ fees, consulting engineers’ fees, and municipal inspection fees, among others.

A homeowner must also speak to his or her insurer or broker to determine what the conditions are if he or she is using his or her home as a business premise.

For most people, a home is their biggest investment and their most valuable possession; thus, insurance against loss or damage should not be an option, but a necessity.

Coenraad de Jager is the personal lines executive at Mutual & Federal