Buying a home is one of the biggest investments most people will make in their lifetime, and it comes with a fair amount of stress. There are so many things to consider before signing on the dotted line: home loans, transfer duties, bond registration, and of course insurance too.

For a first-time homeowner, figuring out what kind of insurance you need can be a bit overwhelming, to lighten the load, Karen Rimmer, Head of Distribution at PSG Insure has put together her four top tips to help you on your journey:

Disclose all the relevant details to your insurer

Did you know that the type of property you buy will impact your need for insurance cover?

There are three main types of residential property in South Africa: freehold, sectional title and property within an estate. Insurance policies for these property types will include specific clauses that pertain to the nature of the property.

“For example, with freehold or freestanding properties, mortgage providers usually require home buyers to take out insurance that covers the physical structure of the house,” explains Rimmer, “but in the case of sectional titles or apartments within housing complexes, body corporates are legally required to insure the physical structure of your home and to include the monthly premium as part of payable levies.

However, what you need to bear in mind, if you have purchased an apartment with the intention of doing renovations that change the structure of the unit, you will need to get approval from the body corporate so that they can be in a position to advise the insurer accordingly.”

Similarly, if you do renovations to your freestanding home or add to it, your insurer should be informed, and your cover adjusted accordingly.

Don’t forget your home contents

“Most first-time home buyers are acutely aware of the kind of insurance that prevents the financial fallout of a major incident like a fire, a burst geyser, or the collapse of a part of the structure,” says Rimmer, “while these possibilities pose very real risks, they are only one half of the picture.”

Building insurance (which covers the structure of the home) does not automatically include the contents of the home – items like furniture, electrical appliances, clothing, or other personal items. Remember that insurance is not a static concept – you will need to review your policy regularly to ensure that any new items you buy still fall within the insured amount, or conversely if you have scaled down, ensure that you are not over-insured.

It can sometimes be more cost-effective to cover all your insurance needs under one policy, for example by combining your home contents and car insurance. Most importantly, remember that insurance is designed to cover very specific risks, as agreed between you and the insurer, which brings us to the next point.

Understand your responsibility as the policyholder

“Taking out adequate insurance should only be one part of your personal risk management strategy,” says Rimmer, “when it comes to determining your premium, insurers consider a variety of factors like the level of crime within the relevant area as well as what you have done as the homeowner to mitigate against potential risks.”

Installing home security systems such as a burglar alarm, security cameras, and electric fences, or making use of the services of a private security company, could go a long way in reducing your premium. You also need to be aware that certain of these elements may be prerequisites for taking out insurance, depending on how your policy is structured. It’s important to note that, once you have agreed to the terms of your policy, it is your responsibility to ensure your home security systems are maintained and in working order to avoid a potential claim rejection or unnecessary complications.

Similarly, it remains your responsibility to ensure the necessary maintenance is carried out regularly to avoid preventable damage to your property.

Keep your adviser in the loop

When it comes to ensuring you have adequate cover for the biggest asset you’ll probably ever own, it can be beneficial to talk to your adviser on a regular basis. Insuring your property will afford you peace of mind that your investment is secure even when the unexpected occurs.

“Each property is unique, and there is a myriad of eventualities that need to be considered. Your insurance needs will also change over time as your insurable asset base increase and decrease over time. An adviser won’t only help guide you on aspects, like how the claims process works, but they can also help to ensure your cover remains adequate as your personal circumstances and insurance needs change over the years,” says Rimmer.

Additional information: 

Statistics from Content Hub show that 79.4% of South Africans are underinsured by 51.9% for the value of their possessions. Under-insurance happens when the current replacement value of insured items is more than the value they’re covered for.

Wynand van Vuuren, King Price client experience partner, says that if you insure items for less than their total replacement value it means you’re under-insured, and your insurer will likely pay out a claim proportionately. “If the correct total insured value for your home contents at the time of a claim for the total loss of all the contents, after a fire for example, is R400,000 but you’ve insured them for R200,000 then you’ll only be compensated for 50% of your loss.”

Maintaining an up-to-date inventory of everything in your home is the easiest way to keep track of the value of your home contents. To get you started, here’s a handy home contents inventory form that you can use to list and value everything you own.

Van Vuuren shares his top three reasons to keep a home inventory:

It acts as a reminder that you need to provide proof of ownership

Your insurer may ask you to prove that you own any items you claim for. This is especially applicable for high-value items like watches and electronic goods. If you have irreplaceable valuables such as collectibles, antiques, firearms, or jewellery, the more detail you can provide, the better. You should take photos of receipts or valuation certificates for these items, and do a video tour of your home, and store them in the cloud or email them to your insurer to keep on file for you. Making a habit of keeping an up-to-date home contents inventory will remind you to do so.

It makes the claims process simple and convenient

“Most people can’t remember what they had for breakfast, much less recall the contents of their closets, kitchen cabinets and garages after a theft, fire, or storm. Disasters are scary and stressful in themselves, and this can make listing stolen or damaged items for a claim even more challenging,” says Van Vuuren. Having your belongings already documented in an inventory can be a huge relief and time-saver when you need to claim.

It helps keep your insurance up to date

Knowing exactly what’s in your home, and what it’s all worth helps when taking out or updating your home contents cover. After all, if you don’t know what you have, how can you insure it adequately?

“When you do a home contents inventory, you must make sure that the replacement value you assign to each item is realistic, so that you’ll have enough cover when you need it. Remember, it’s always better to be over-insured than under-insured. It’s also important to remember that your insurance for your home contents is essentially a month-to-month contract so, ideally, you should check your policy doc monthly – especially if anything has changed.” says Van Vuuren.

Article credit A four-point guide on insurance for first-time buyers – Home Owners, Advice (property24.com)