Buying a house will most likely be the single biggest investment you’ll ever make and therefore it is very important to ensure that your home is properly insured against anything possible that could go wrong – especially with the exceptionally high crime rate South Africa struggles with every day. But which insurer or policy is best suited to be trusted with such an important task? We decided to find out more about insurance from Phil Cooper Insurance Brokers.
Q: Why do you recommend using a broker rather than a Direct Insurer?
PC: A broker’s job is to get you the most cost-effective cover they can, with the insurer best suited to your needs. If you deal only with one Direct Insurer you are obtaining only one quotation on only their standard product, which may well not be ideal for you. Ensure the broker with whom you are dealing gets at least 3 to 4 alternative quotations!
With a Broker you will also develop a personal relationship and you get to always speak to someone you know. A direct Insurer offers you only the next operator every time you phone – no continuity. Remember that by using a Direct Insurer you are not actually saving the broker’s commission. Direct Insurers have extremely high advertising costs, so instead of paying broker fees you pay for ad campaigns. When you claim, a Direct Insurer’s profits are maximised by minimising your claim. When you claim via a Broker, his best interests are to maximise your claim, to keep you as a happy client.
Tip: Choose a reputable, knowledgeable broker to place your covers for you.
Q: There are two main types of home insurance cover: buildings insurance and contents insurance. Tell us a bit more about each kind of insurance?
PC: Contents insurance:
- One cover that everyone needs and is often not understood until a claim is suffered and the flaws come to light. You should expect your policy to cover “the entire contents of every description not more specifically insured being the contents of the residence described in the schedule”. This means that:
- Everything in the house is covered it includes the main house, garages, contents of outbuildings, garages, etc.
- Items insured under the All Risks section need not be included under the Contents cover.
- If your home suffers a loss making it “uninhabitable” – such as flood damage or a fire – almost all policies include cover for you to stay elsewhere until your home is habitable again.
- Most policies also extend to cover your contents whilst “temporarily” elsewhere. So, if on holiday in a hotel the theft of your clothing from your room may well fall under your householder’s contents policy covers.
Buildings insurance:
The perils against which you are covered under this policy are usually very wide. Cover includes fire, storm and wind damage, impact by vehicles, and numerous other extensions which are added on. However, this is one policy where you should scrutinize the covers carefully. Covers vary from limited “specified perils” wordings to wide “All Risks” bases! There is nothing worse than having an expensive loss, only to find that your Insurer excludes the peril which caused the loss. A typical example these days is cover for the replacement of a geyser once it stops working. This is one of the most common forms of claim under this type of policy, but nowadays a number of Insurers have excluded this from their standard policy, or reduce the benefits payable on a sliding scale depending on the age of the geyser. While they do cover the consequences: replacement of ceilings and fixed carpeting, etc., they will not cover the cost of replacing the geyser. So, read your wording and make sure you know what you’re getting.
Remember to always …
- Read the policy when you get it, to ensure that there are no exclusions of which you were unaware at quote time!
- Comply with policy conditions: If it requires burglar bars on each window, ensure that it is so, or they might not pay.
- Declare all facts when applying for insurance: They need to know if you have a lapa close to your home or if you’ve had claims in the past.
- Update your insurance policy each year and have it amended.
Excess
With almost every insurance policy there will be an excess that you will have to pay. This is the contribution you will make to the repairs, should you need to make a claim. The value of the excess will impact the amount you pay in premiums, but avoid just picking the highest excess value to reduce your monthly premiums.
Phil Cooper stresses that it is important to ask what your excess will be at quote stage. “Clients frequently get burnt when they are told the excess is just R1 500 for their car. But when the claim arises, they find because it was a single vehicle accident an extra R5 000 applies, and because it was after 22h00 at night, another 10% of claim applies, etc.”
Note: “Be careful of Insurers who offer “cheap” insurance – frequently one finds that it is ‘cheap and nasty’, with limits on the policy which are much higher on slightly more costly Insurers. Or, when you have a claim, suddenly high excesses apply.”
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