What you need to know about Home Insurance

The latest South African Police Service (SAPS) crime statistics revealed that there were 220,865 incidents of house burglary reported in 2018/19. This means that, on average, 605 houses were burgled a day. It also means that home insurance has become an imperative for South Africans.

Despite this, many South African homeowners are unsure of what is covered under their home insurance policy and may find themselves in a predicament when something goes wrong and they need to claim.

When homeowners do not fully understand their home insurance policies, they expose unnecessarily themselves to the risk of an insurance claim being rejected or receiving a reduced pay-out as a result of being underinsured.

Below is a list of the common mistakes that people make when applying for home insurance and how these can be avoided:

1. Electric fence regulations: Homeowners who are planning to have electric fencing installed or upgraded must comply with new legislation as stipulated in Regulation 12 of the Electric Machinery Regulations of 2011. This legislation stipulates that all new, upgraded or repaired electric fences are required to comply with strict regulations now governing the industry, and the homeowner must have in their possession a certificate of compliance issued by a certified installer. Non-compliant electric fences put homeowners at risk of having their insurance claim rejected. By keeping the above in mind and understanding your home insurance policy, homeowners are able to avoid their insurance claims being repudiated.
   
   
2. Contents underinsurance: Failing to insure home contents for the correct and updated replacement value is a major problem for many homeowners. Most people tend to take out a home contents insurance policy and simply renew it every year, without taking the necessary steps to update their level of cover, despite having purchased new contents for their home.
   
   Homeowners must realise that the impact of underinsuring their contents can have huge implications when it comes time to claim. For example, if a home contents insurance policy provides cover for R150 000 but the contents of the home are actually worth R300 000, this means the homeowner is actually underinsured by 50%. As the premium only covers the risk of half of your household goods, the insurance company will most probably only pay out half of the claim, so the insured would receive R75 000 if they filed a claim for R150 000.
   
   Another common problem with regards to insuring home contents is neglecting to take price inflation into consideration. If you bought a TV in 1989 for R2 000 and are looking to replace it, insurance companies will look at what it will cost to replace the TV with the newest model today, so the R2 000 TV is currently worth R12 000.
   
   
3. Poor maintenance: Homeowners who fail to properly maintain their homes place themselves at an increased risk of their insurance claims being repudiated. Most homeowner insurance policies will only cover damage caused by unforeseen events and regard home maintenance as the responsibility of the homeowner, thus any claims determined as a result of poor maintenance or neglect are most likely to be rejected.
   
   
4. Defective alarm systems: Many homeowners do not realise the importance of testing their home’s alarm system on a regular basis to ensure it is in good working order. All homeowners insurance policies will stipulate that it is the policyholder’s responsibility to keep the alarm system in full working condition because should a theft occur as a result of a faulty alarm, the claim is likely to be repudiated. This includes the alarm battery being flat.