Have you got it covered?

ALTHOUGH natural disasters and extreme weather conditions are not in the foreground of the average South African homeowner’s mind, they need to be prepared for any eventuality.

While South Africans have mostly been unaffected by climate change, natural phenomena such as floods, lightning strikes, ground movement and fires do occur.

This makes it vital for homeowners to ensure their household insurance covers these occurrences along with their household contents.

Remax of Southern Africa chief executive Adrian Goslett, says: “It is always important to read through any insurance contract carefully to be sure of exactly what is covered by insurance and what isn’t.

“Although it is impossible to know when and what kind of disaster could occur, it is essential to ensure that whatever policies are in place cover both the property itself as well as the contents against natural disasters.”

He notes that so often insurance policies are the first item to be cut back when a homeowner is trying to save on monthly expenses.

“While it may save money in the short term, the long term effects could be financially devastating should anything happen. This was seen during the St Francis Bay fires in December last year when over 76 homes were burnt to the ground.

“Unfortunately the fact is that household insurance is not an indulgence – it’s a necessity.

“The question is not whether a homeowner can afford to be insured, but rather if they can afford not to be.”

He adds that even if homeowners are covered and have insurance policies in place, it is advisable that they relook the policies on an annual basis in order to ensure that the cover meets their current circumstances. “Often homeowners accumulate additional assets or upgrade items in their home, which will have an impact on how much insurance they require to replace these goods. It is also important to remember that the property will also increase in value over time, which will have an additional impact on its replacement value.

“The insurance value on the property should be based on the amount it would take to replace the home, not necessarily the current market value. Insurance companies consider it the homeowner’s responsibility to inform them of any changes that may occur. In some cases it may be cheaper to buy an existing home than rebuild one, which makes it vital for homeowners to look at rebuilding costs rather than what they paid for the property,” Goslett says.

To assess how much cover is needed, Goslett says homeowners should check the cost of rebuilding 1m² in their area and then multiplying that value by the home’s total square metre area.

A professional real estate agent will be able to assist with the square metre value and a local builder can provide the homeowner with the current cost of rebuilding a property.

He notes that additional features such as swimming pools and lapas should also be considered in the valuation process.

“Once these figures have been worked out, as a rule of thumb, homeowners should add an additional 15% to receive the amount of cover required to replace the property,” Goslett says.

“Very often homeowners underinsure their properties and are unable to replace what they had.

“This is why it is important for homeowners to insure their property at the correct value and thereby not deal with the harsh emotional reality of not being able to replace their home or valuables.”

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