Understand your home insurance before you claim

Fully understanding the terms and conditions of your home insurance could mean the difference between an approved claim or paying through the nose from your own pocket, says Nicolette Dirk.

Many homeowners only take time to understand the stipulations of their insurance when they need to claim. Here are some tips to consider before signing up for home insurance.

Don’t assume that your policy covers everything.

According to Denise Shaw, head of Standard Insurance Limited, when you purchase home insurance telephonically, the most common question agents ask is whether your house has a thatched or tiled roof. “Your house may have special fittings, like expensive slate tiles  or costly imported flooring, ) that may not be covered. If the fittings or features are not specified in the policy, the home could be underinsured,” says Shaw.

Don’t under-insure your home

Underinsurance occurs when a homeowner underestimates the real replacement cost of the home. According to Shaw, home owners can end up in serious debt in the event of their home being damaged or destroyed.

According to Aon Private Insurance Brokers, South Africa is more exposed than most countries to loss from crime, burglary, vehicle claims, car hijacking and theft . But statistics show that about 40% of insurance policyholders are dramatically underinsured.

“This poses the risk of serious financial loss and the temptation to reduce covers should be resisted. In the event of a claim, you are likely to be paid out only partially for the loss,” says Aon spokesperson, Mandy Barrett.

Don’t over-insure your home

A house is over insured when the owner believes it is worth more than it actually is and insures it accordingly. But sometimes the insurance will only pay the portion of what the customer considers realistic and the additional money paid in premiums is lost.

It pays to protect yourself

According to Miway Insurance, burglar bars and security gates on sliding doors reduces the risk of burglaries and you will probably pay a lower premium for additional security installed.

A house located in a security complex or boomed-off residential area with 24-hour security and added security measures will also attract a much lower premium than a stand-alone property with no extra security precautions.

Location is key

Location is a very important consideration when taking out insurance. According to Barrett most standard policies will cover property for the usual perils such as damage incurred from heavy rain, wind storms and lightning. But  if you live in an area that is more likely to be hit by floods, for example on a river bank, or is more exposed to perils such as landslide and subsidence, your home insurance policy may exclude any claims or add an extra loading to your premium.

“You may be under the false impression that your home built against the mountainside is covered for the landslide and subsidence, when in fact it is not. Understanding the exact exclusions and inclusions for that matter, of the policy wording is crucial,” says Barrett.

Get expert advice before insuring your home

Major repairs to a house will incur costs at the rates that apply to materials and labour at the time the damage occurs. Rates differ depending on finishes, design and location of property. According to Shaw, these costs will apply regardless of the age of the house so you should make sure your house is insured for replacement at current costs.

“Consider the services of a property valuation expert before insuring a home. The cost of this service is reasonable and will be recouped many times over if a claim is lodged. The unique particulars of the home can then be provided when requesting an insurance quote, so you will be sure your house is adequately insured,” says Shaw.

Tips on shopping for home insurance:

1. Consult a property valuation expert to make sure your house is adequately insured at current cost.

2. Declare all fittings in your house as it may need expensive repair work when you claim.

3. Lower your premiums by taking extra security measures. You can, for example, install burglar bars and security gates into your house.

4. Be aware that where you live may cause exclusion from any claims or add an extra load to your premium.