Keep your insurance updated
Category Owner Advice
If you're paying for homeowner's insurance (HOC), you should have nothing to be concerned about when events such as fires, floods or the recent earthquake in Johannesburg occur.
Unfortunately, however, natural disasters such as these often bring to light the fact that many homes are significantly underinsured because their owners have failed to update their insurance coverage in line with the increase in property values and building costs over the previous few years.
And this can lead to financial consequences that are even more devastating than the catastrophe that damages or destroys your home. If you are underinsured, your insurance company may refuse to pay for any damages, leaving you to carry the full cost of repairing or replacing your home, as well as the outstanding home loan balance on the lost home.
However, it is relatively easy to avoid that situation if you take the following steps:
*Review your HOC policy annually to ensure it adequately covers your home's current value. This is important to do even when home values are rising only slowly, as they are currently, and also when you make any additions or alterations to the property.
*Assess the replacement cost: Determine the current replacement cost of your home, which is the amount required to rebuild it from scratch in case of a total loss. This cost should include factors like materials, labour and any additional features or upgrades, as well as the cost of any demolition that might be necessary and any professional services you may need.
*Make sure that you understand the coverage limits of your HOC policy and that these will align with your needs in the event of a major disaster. If these limits seem insufficient, consider increasing them to avoid being underinsured.
*Look out for any exclusions and limitations specified in your policy. Some specifically do not cover landslip due to earthquakes, for example. So if you live in an area prone to such risks, you may need to buy additional coverage.
*Seek professional advice. For complete peace of mind, consult an insurance broker to make sure you have adequate coverage for your home. They can guide you through the process, explain policy details, and answer any questions you may have.
Author: Chas Everitt