When it comes to getting your home loan approved, one of the requirements is building insurance. In our previous article, we discussed the benefits of building insurance in South Africa.
In this article, we take a look at how to get the most out of your insurance. The secret lies in understanding your insurance policy, what exactly it covers, how much it covers, and what your excess is.
Building insurance covers homeowners for damage done to the structure of their building as a result of unforeseen events. It also covers fittings and fixtures inside the home. Building insurance, however, does not cover homeowners against theft; a separate insurance policy is required for this.
When you apply for a bond in South Africa, its approval is dependent on whether or not you have building insurance, also known as homeowner’s insurance. The reason for this is not only to protect you from the risk of structural damage to your property, but also to protect the bank from the same thing. When a bank loans you money for your home, they want to know that almost nothing will stand in the way of you repaying them as per your agreement.
The unfortunate reality is that structural damage can happen to anyone. Such damage can be caused by fire, floods, hail, lightning, and burst geysers or pipes. Although building insurance can feel like a grudge purchase to some, having it prevents homeowners from digging into their life’s savings to pay for structural damage. It’s compulsory for any homeowner to have building insurance in place when applying for a bond with any bank, but it’s also a smart, long-term investment for the homeowner.
Although every policy is unique, some of the things covered by building insurance include:
Insurance excess is an amount which is payable to the insurer before a claim is paid out. Excess payments help to keep your monthly premiums lower and also discourage petty or fraudulent claims.
Before your insurer compensates you, or pays for repairs or services are carried out, you will need to pay your excess as per your policy. When the service provider has completed their work and the repairs have been finalized, you will need to complete and sign certain documentation to inform the insurer that you are satisfied with the standard of workmanship and service offered by the contractor.
How much your building insurance costs will depend on several factors such as the value of your home and your unique needs as a homeowner. The best thing to do is to determine the type of cover you require, and speak to a professional about your options. Once you have this discussion, you will know how much building insurance will cost you per month.
Building insurance is a requirement when it comes to applying for bond approval in South Africa. Our bond originators are well-versed in all things property and can help you get all the necessary documentation you need for a successful bond application.
In addition, we help you find the best home loan deal in South Africa. Contact us for assistance.
Get the latest updates in your email box automatically.