The purpose of building insurance is to help you recover from a loss or damage that was caused to your insured property during an unexpected event. Building insurance normally cover a wide range of potential risks, including damage from fire, storms, theft, and even accidental damage like a burst geyser.
You will be compensated for loss or damage to your insured property, on condition that you pay the monthly premium, comply with the policy terms and conditions and provide your insurer with true, accurate and correct information. Failure to adhere to these conditions means that your insurer may not accept your claim, cancel your policy or recover any compensation they have given you for previous claims.
If you’ve taken a loan to buy your home, building insurance is a bank requirement in South Africa. You should have it in place from the day the property is registered in your name. This reassures the bank that damages to the structure of your home can be repaired, or the loan can be paid off if your home is totally destroyed. Even without a bond on your home, building insurance is valuable. It guards against unexpected incidents and covers repair costs to the structure of your home, providing you with peace of mind knowing your home is protected when needed.
Normally as an industry standard your premium is based on several factors, including the replacement value of your home, its location, the security measures in place, and the cover options you choose. In essence, an insurer determines the risk attached to your property and will determine the premium accordingly.
Building insurance generally covers the structure and permanent fixtures of your home. For your personal belongings, you’d need contents insurance.
Building insurance provides coverage for the physical and immovable structure of your private home, as long as it is made of brick, stone, or concrete and has a roof made of slate, tiles, metal, concrete, or asbestos. This coverage typically includes various aspects of the property such as:
• Domestic outbuildings, private garages, carports, walls, gates, and fences – with the exception of those made of wood, wire, or hedges.
• Permanent fixtures and fittings within the property, like built-in cupboards, light fittings, geysers, and security system, fixed antennas, satellite dishes, masts, and lightning conductors, solar heating panels etc.
• Utility connections for water, sewerage, gas, electricity, and telephone.
• Swimming pools and associated machinery, with the exclusion of above-ground pools, vinyl plastic pools, or automatic pool cleaners, tennis and squash courts.
• Pathways, driveways, and surfaced areas made of brick, concrete, asphalt, or stone, but not gravel.
It’s important to carefully review the specific policy terms and conditions to understand the exact scope of coverage provided by your building insurance.
Building insurance normally includes provision for alternative accommodation if your home becomes uninhabitable due to insured damage. Remember to always ask your insurer for the details of what is covered and read the details in your policy schedule and policy document.
You could potentially reduce your premium by implementing additional security measures at your home or increasing your excess.
If you are insured for less that the replacement value of your property, it means you are under insured. That’s why it’s crucial to insure your home for its accurate replacement value, not its market value. This helps avoid under insurance.
Generally, building insurance covers sudden and unforeseen incidents. Gradual damage like wear and tear or leaks over time might not be covered. It is very important to maintain your property to make sure you reduce your risk of wear and tear costs.
An insurance excess is the amount you pay when you make a claim. Most insures allow you to choose the excess you want to pay at claim stage.
Home contents refer to everything INSIDE your home: the furniture, appliances, electrical devices, curtains, décor, and even clothing, jewellery, and toys. These items should be used for your private purpose and kept inside your home.
Whether home contents insurance is necessary depends on your personal circumstances. If you could not afford to replace your belongings if they were damaged or stolen, or if you have valuable items that could be targeted, then it may be a good idea to have contents insurance.
Home contents insurance typically covers items inside your home that aren’t part of the structure, including furniture, appliances, clothing, and personal items. It can cover them against risks such as theft, fire, water damage, and accidental damage.
Home contents insurance usually does not cover wear and tear or damage that happens gradually over time. Certain high-value items may also not be covered unless specifically listed in the policy. Always check your policy document for exclusions.
The amount of coverage is often determined by the total value of all the items in your home. It’s important to accurately estimate this value to ensure you have enough coverage to replace your belongings if needed.
Some, but not all, contents insurance policies will cover personal belongings that you regularly take outside your home, such as laptops, jewelry, or bicycles. This is often referred to as ‘personal possessions’ or ‘away from home’ cover. But you have to ask for this cover and you can specify certain items.
If you underestimate the value of your contents and they’re damaged or stolen, you may not receive enough from your insurance payout to replace everything. This is known as ‘underinsurance’.
It’s a good idea to review your home contents insurance policy at least once a year, or whenever you make significant new purchases. This ensures your coverage remains adequate as your circumstances change.
Some policies include cover for accidental damage as standard, while others offer it as an optional extra. Accidental damage cover protects against unexpected and unintentional one-off incidents that harm your home contents.
An excess is the amount you have to pay towards any claim you make on your home contents insurance. The amount of the excess can often be adjusted, but remember, a lower excess will generally mean higher premiums.
Home contents insurance is separate from building insurance. While building insurance covers the structure of your home, home contents insurance covers the items inside your home.
It covers loss or damage to your personal belongings and household goods caused by insured events. These events may include storms, flooding, leaking pipes, theft, malicious damage, impact from vehicles or falling trees, and power surges. The policy also covers accidental damage to mirrors or glass that are part of your furniture or appliances.
Items damaged by the policyholder, members of their household, or a legal tenant are not covered. Properties vacant for more than 60 consecutive days or abandoned are also not covered. There is no cover for scorching, money, cheques, bonds, coins, stamps, foreign currency, or other negotiable instruments, as well as counterfeit goods.
Normally your guest’s belongings and your domestic worker’s belongings that are stolen from the insured property are covered.
Some insurers may cover the loss or damage of keys and locks.
Personal portable possessions that belong to you or members of your household are covered for theft, loss, or accidental damage when taken out of your home. This includes items like clothing, handbags, gym bags, jewellery or other items. However, some items will have to be specified in order for them to be covered.
Underinsurance refers to not having your possessions insured for their full replacement value. The replacement value is the cost to replace your old item with a new one at the time of your claim.
Life insurance for a bond is a policy that will pay off the balance of your mortgage if you pass away before it’s fully paid off. This ensures your loved ones and dependents won’t be left with mortgage debt.
While it’s not legally required, it’s often a condition set by your bank. This is to ensure that the mortgage can be paid off in the event of your death, protecting both your dependents and the bank from financial risk.
The sale isn’t automatically cancelled. The executor of your estate would be required to fulfil your obligations as outlined in the OTP, such as paying the purchase price and settling other related costs. That is why having life insurance in place is so important.
The bank may claim against your estate for the outstanding amount of the loan. Most lenders also have a security interest in the property, and may take possession of it to recover the outstanding debt. That is why having life insurance in place is so important.
The property will become part of your estate and will be subject to the distribution according to your will. If you do not have a will, your estate will be allocated according to the laws of intestate succession. That is why having life insurance in place is so important.
An executor administers your estate, which includes settling any liabilities, like a home loan or vehicle financing. After these are settled, any remaining cash in your estate will be distributed to your beneficiaries.
The executor must sell assets like your property or vehicle to pay back any money you owe to creditors. This is where life insurance can be crucial, as the tax-free payout from your policy can be used to pay back loans, ensuring your beneficiaries can keep the home.
Life insurance provides a tax-free payout that can be used to pay back any outstanding home loan. This means your beneficiaries can continue living in the home you’ve created together, even if your estate lacks the cash to settle the debt.
If your estate is unable to fulfill the OTP obligations, the seller could have grounds to cancel the agreement and seek damages against the estate.
The amount of life insurance you need typically matches the amount of your outstanding mortgage. This ensures that the mortgage will be fully paid off in the event of your death. But if your life cover is more than your bond the balance will pay out to your loved ones and they can use the money to pay for your children’s education for example
If you already have a life insurance policy, you can usually assign it to cover your mortgage. However, you should consider whether this will leave enough cover for your other financial obligations and dependents’ needs.
If your bond is paid off at the time of your death, the payout from your life insurance policy will typically go to your designated beneficiaries.
No, the bank can’t force you to take out life insurance or building insurance with them. Many banks offer their own life insurance products but you have the right to shop around and choose a policy that suits your needs and budget.
Some life insurance policies offer additional optional benefits that can pay off your mortgage if you become permanently disabled. However, this varies by policy, so it’s important to read the terms and conditions.
If you switch your bond to a different bank, your life insurance policy typically stays with you. However, you may need to inform your insurance provider about the change.
If your life insurance policy is ceded to the bank to cover your mortgage, the payout typically goes directly to your bank while the balance will be paid out to your beneficiaries.
Once your mortgage is fully paid off, you can cancel your life insurance policy if you wish. However, you may want to keep it if you have dependents who would benefit from the payout.
A Last Will and Testament is a legal document that allows a person to express their wishes regarding the distribution of their property, possessions, and the care of minor children upon their death. It also designates an executor to manage the estate.
A will ensures that your assets are distributed according to your wishes after death, and not based on state intestacy laws. It can reduce family disputes and streamline the probate process, making it easier for your loved ones.
If you die without a Will, your estate is distributed according to the intestacy laws of your jurisdiction. This may result in assets being distributed in a manner contrary to your wishes and can cause delays and additional costs.
Yes, you can update or modify your Will at any time as long as you are of sound mind. You must adhere to the same legal requirements as when creating the original Will.
An Executor is the person responsible for managing your estate, including paying debts and distributing assets. It is usually advisable to choose a trustworthy, responsible person, such as a family member, friend, or legal professional.
Yes, a Will can be contested, but only by someone with legal standing, such as a beneficiary or someone who would have benefited if not for the Will. Common grounds include undue influence, fraud, or lack of capacity.
Witnesses are generally required to confirm that the testator (person making the Will) is of sound mind and is signing the Will voluntarily. Their role helps in establishing the validity of the Will. A beneficiary of your Will cannot sign as a witness. Witnesses must be 18 years and older.
The Probate process varies depending on the complexity of the estate and jurisdiction. It may take anywhere from a few months to several years.
Yes, you can leave assets or a portion of your estate to a charity or multiple charities through your Will.
A Living Will is a separate document from a Last Will and Testament. It outlines your preferences for medical treatment in case you become unable to communicate your wishes.
Your Will should be stored in a safe, secure location, such as a safe deposit box or with an attorney. It is also wise to provide a copy to the executor or inform them of the location, so they can access it when needed.