And buyers are required to have the insurance in place before the registration of transfer when the risks of ownership transfer from seller to purchaser. The benefits aren’t one-sided though as it does protect both the buyer and the bank from loss and it covers a multitude of potential situations.
Choose wisely
However, it’s critical to ensure you choose a policy that is right for you because although the standard cover is basically the same across the board, every insurer and underwriter’s stipulations will differ to at least some degree and certain policies may therefore suit your unique needs better than others.
Also bear in mind that the way in which claims are settled also differs from company to company, with some being more flexible and open to negotiation than others.
That said, selecting the right policy and ensuring one is adequately covered can be more complex than one thinks as it’s important to correctly determine the overall value that should be ascribed to the property.
Important criteria in selecting the right cover
Firstly, you have to establish exactly which components are considered part of the building as there are other elements over and above the bricks and mortar of the primary structure and obvious outbuildings and these must also be valued and included in the overall insured amount.
These elements include: concrete, asphalt, synthetic grass or stone (not gravel), fixtures and fittings, fixed recreational and ornamental structures, boundary and other walls, paved and surfaced areas of brick, fences, gates posts and gates including all their mechanisms.
Building insurance will also cover non-essential features such as swimming pools, tennis courts, satellite dishes, spa baths, saunas and associated machinery and equipment as well as borehole machinery supplying water for domestic purposes and septic tanks.
This can be even more complex and extra care must be taken if one buys a home with unique features and in such a case it’s essential to shop around and compare policies.
And if a property is registered with the National Monuments Council, insist on Guaranteed Replacement Cost coverage which allows for the restoration of your historic home as this would cover you for the full cost of rebuilding, or restoring, regardless of policy limit.
Emergency cover
Over and above being critical for the reparation of structural damage, building insurance can also be extremely useful to homeowners in several emergency situations as their insurers are often their first port of call.
In fact, many people are unaware that most building insurance policies also cover emergency service expenses, including plumbers for burst geysers, security to protect your property should the need arise and also replacement of keys, locks and remote-control units.
Some policies will also cover alterations to your dwelling should your mobility become impaired and you’re confined to a wheelchair, damage to your garden caused by impact such as a vehicle accident, geyser wear and tear and even accidental breakage of fixed glass or sanitaryware.
But in order to enjoy the full benefits of this cover, it is important to keep your property evaluation up to date and to advise your insurer when any alterations or renovations are done.
Most insurers will increase your premiums annually, taking inflation and building material costs into consideration, but it is up to the insured to request a reassessment of their property, especially if they’ve carried out any renovations.
The perils of being under-insured
After enduring a traumatic experience like watching your home and worldly possessions engulfed by flames, the last thing you need is the additional stress of hefty bills and future financial strain because of inadequate insurance.
Underinsurance often occurs because people mistakenly think that a home should be insured for its market or sale value, whereas it should actually be insured for its replacement value; in other words, the cost of rebuilding the property to its original condition.
And the same applies to household contents insurance – always insure household items and valuables for their current replacement value and not what you originally paid for them, which is another good reason to update your policy every year.
Over and above the personal costs, depending on the municipality and the nature of the disaster, you also may be subjected to a fee for the deployment of emergency services and the resources that were used, so it’s important to be aware of what services are covered in your area and what you may be expected to pay for.
Be prepared
No-one wants to dwell on unpleasant events that may never occur, but the fact is that they do happen and being well-prepared for any eventuality is not only sensible; it affords you peace of mind, allowing you to get on with life with one less thing to worry about.
Always keep important documents such as IDs, passports and insurance policies in a safe place as it’s traumatic enough dealing with the trauma of a burglary or an event like a fire, and the last thing you need is someone using your identity for nefarious purposes.
“It’s also a good idea to keep emergency contact numbers on hand and to know who to call in the event of an emergency situation because a quick response can significantly limit the damage.
You have a choice
Ultimately, buildings insurance is one of the most important policies you will purchase and your bank will insist that you have such cover, but what many people don’t realise is that they can’t force you to take their insurance offering.
“You can obtain building insurance from any accredited insurer, which enables you to compare costs, benefits, coverage, reputation and service before selecting the cover that best suits your needs whilst also meeting the basic requirements of the lending bank.
A final word of advice to home buyers is to not to leave insurance until the last minute because rushing through the process could easily result in underinsurance as well as lack of cover for key factors, especially if the property has unusual features or is an historic home.
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