Historically in South Africa it was a bank requirement that you had to insure your building with the bank that held your bond. This is no longer compulsory, and you may insure your residential building with any of the leading insurers. Despite this, many homeowners still have their building insured with their bank, often paying high rates while being underinsured at the same time.
If your buildings insurance for your house has been with the bank for a long time, it is possible that your sum insured for your house is still based on your original purchase price and may be significantly lower than the correct insurance value which would be the cost to re-build your house and the other fixed improvements. Different banks apply different inflationary increases and depending on when you bought your home, your sum insured may not accurately reflect the cost to re-build your home. If you have changed your house contents and car insurance recently, you may have reviewed these covers, but forgotten about your buildings insurance which is even more important.
Your house will probably be the most expensive item that you will ever buy – being underinsured can be devastating as you will not be paid out in full irrespective of how big or small your claim is.
WHAT IS THE CORRECT VALUE TO INSURE MY HOUSE AT?
Your Residential Building should be insured at the full replacement cost/value of all fixed improvements on the property (not just the main building), including, but not limited to demolition fees, architects’ fees etc. Your house may have high quality fixtures and fittings in which case your house may be worth more than an identical house with less valuable fixtures and fittings.
Many people wrongly assume that because the risk of suffering a total loss is quite small, they can insure their house for less than the replacement value and be able to claim for smaller losses. This is incorrect, because if the house is under-insured, the law of average will be applied to the claim and the pay-out will be proportionate depending on the extent of underinsurance.
WHAT DOES MY RESIDENTIAL BUILDINGS INSURANCE COVER ME FOR?
You will generally be covered for loss or damage to the structure of your building structure, garage, swimming pool etc. for the following perils;
- Fire, Lightning, explosion and / or earthquake
- Burst Water Pipes or Geysers
- Storms and Floods
- Damage caused by animals, vehicles and falling trees
- Malicious or intentional damage
- Break-in or theft with forcible entry
- Limited Subsidence and landslip
Other Information about Residential Buildings insurance
Kayser Baird offers a number of convenience benefits and will ensure that you have the best possible cover at competitive rates. If you would like to find out more about this cover please contact us.