Household insurance is a policy that you take in order to protect your property. Whether you rent or own a house, our properties are valuable. When you choose to insure them, you will have a peace of mind should anything happen to your home. You cannot predict life, especially natural disasters such as flood, storm, fire and tornadoes. If you choose to protect your property, you won’t be worried about having to loan money from the bank in order to replace or repair the damages done to your house. It’s up to you; you can insure both property and furniture in your house.
Majority of home insurance policies only cover the main garage, dwelling and other properties that can be locked. Your household policy can also cover you when you lost your house or property damaged. The insurer will pay for all costs such as rebuilding fees and momentary accommodation for property owners.
There are so many various types of household policies that will suite your needs. For example, if you are planning on staying near fire-prone bush-land, find a policy that will cover the risks you desire to insure. Many property policies cover bushfires, cyclones and storms, however, not every insurer offers flood insurance policy. So this is something that you need to consider when buying a new property.
Types of household insurance
- Home insurance – this covers you when there’s damage or loss of property or house that you own.
- Contents insurance – this is commonly known as the insurance that covers you when your belongings have been damaged or stolen from your property.
- Landlord’s insurance – this covers any financial loss related to renting out a property. If you are renting a property and something damages the property, the landlord’s property will be covered.
- Home and contents insurance – this is the combination of home and furniture insurance. Read above.
- Strata insurance – this insurance policy covers financial losses linked with loss or damaged to assets that operate under a strata-title. This refers to torrens or company title agreement with several units.
- Tenant’s or renter’s insurance – this covers for a low cost contents that belong to renters. However, you can only be covered in an event of theft or damaged caused by fire to your contents.
Having enough home insurance
It is always advisable to check with your insurer if you are paying the right premium for your home insurance so that you are not under-insured in an event of a valid claim. Discuss this with your insurance company and find out if the cover matches the replacement costs of your household.
When you are under-insured, this means that you will end up paying the gap between the costs of replacements (including repairing your house, paying for temporary accommodation) and your insurance payout while your claim is being processed.
Expenses and costs
Rebuilding your property after it was demolished or damaged can cost you lots of money, not to mention the headaches it’ll give you. Materials and labour amount will have to come from your pocket. If you are not insured, you will also need to pay for your own temporary accommodation, pay for surveyors, lawyers and professional services.
Double check with your insurer as each treat costs in a different way. Additional cover may be included in the amount cover. Review the Product Disclosure Statement when buying an insurance. Make sure that these costs are included in your policy. Also ask what kind of services they cover so that you will also know if there are restrictions and limits.
How household premiums are calculated
Your home insurance company can look at various factors when calculating your monthly premiums. We have listed different factors that insurers look at, see below:
- They look at the risk profile of household
- The year your property was built
- How your property is occupied
- The cover level you chose
- Location of your property
- Basic excess chosen
- Construction materials
- Pertinent government charges
- How you use your property (business or residential use)
Savings and discounts for property
Your insurer may decrease your premiums if security and safety measures are put to place. Smoke alarms, deadbolt blocks, security systems, and fire extinguishers are things that insurance companies also look at. Some insurance might want to see these items before insuring you.
After the insurer is done calculating for your premium, they will assess to see if you’re entitled for discounts like:
- Multi-policy discount
- Link policy discount
- No-claims bonus
- Years of insurance discount
You need to check your policy document for any discounts. This will be written on your Certificate of Household Insurance.
Image Courtesy: moneyshop.co.za
Zita Zimande is a sports news journalist from the University of Johannesburg. Besides being a sports fanatic, she loves to cook during her spare time.