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What is Homeowner’s Insurance and Why is it Crucial?

  • Latest News
  • September 23, 2021
What is Homeowner’s Insurance and Why is it Crucial?

These days, having insurance for many aspects of our lives is not only a norm but a necessity. In cases of emergencies, having a lump sum to access would be ideal, but most of us don’t have enough cash in savings to repair extensive damages, replace treasured belongings, and pay for steep hospital bills or other unforeseen expenses. Although it can be costly paying monthly insurance bills, insurance allows us to put our minds at ease that we will be protected and aided when in need.

What do homeowner’s insurance providers typically cover?

  • Fire or smoke damage
  • Weather damage or natural disasters – windstorms, lightning or hail, etc.
  • Fallen trees that cause damage
  • Theft of personal belongings
  • Injuries to people on our property

Do you have to get homeowner’s insurance?

A bank or bondholder usually requires a homeowner to take out a comprehensive insurance policy for the value of your home. This is usually for the immovable property – the structure. This is in case of structural damage or loss due to fire or weather damage.

How much does Homeowner’s insurance cost?

A monthly premium is paid per month to an insurer. Factors that influence the cost of the monthly premium are dependent upon the individual’s circumstances, personal requirements of the policy, and value of their property. Many insurers encourage their clients to insure to the cost of fully rebuilding their homes. Therefore the cost consideration would be the replacement value of the property, and not the purchasing price.

The following can be valued for replacement due to damage or loss:

  • Ovens and hobs
  • Kitchen sinks
  • Toilets
  • Hot water cylinders and heating related fixtures
  • Fixed structures such as water features, swimming pools, decks, tennis courts, hot tubs etc.
  • Paved and surfaced areas in brick, concrete, asphalt, stone, or synthetic grass.
  • Walls and/or fences, and gates and gate mechanisms
  • Boreholes and septic tanks
  • Satellite dishes

Why is homeowner’s insurance important?

Homeowner’s insurance is different from Home Insurance, which effectively protects the lender or bondholder by insuring the house itself. Homeowner’s insurance safeguards your home, all contents and belongings inside your home, and the home owner. Once the bond on your home has been paid off, you will have 100% equity on your home, so having homeowner’s insurance is essential for future financial health as a home owner.

If your insurer is able to provide funds for damage to your property, repairs can be done in a timeous manner. Having damages repaired at your home can often prevent further damage. If the repairs are extensive and your home becomes inundated with helpful handymen, insurance companies may provide temporary living expenses so that you and your family can live elsewhere comfortably until your home is ready for you. Obviously, a claim needs to be filed and approved beforehand. Some policy providers offer incentives that allow for cash back if no claims are lodged after a certain amount of premiums.

In order to make sure you can sleep easy knowing your home is protected, it is in your best interest to get homeowner’s insurance.  It can be tricky to make sure that all the t’s are crossed and the i’s are dotted, so consider speaking with your property professional or consulting with a broker or attorney who will help with the finer details and terms and conditions of homeowner’s insurance.

Before you start the search for a property for sale, it’s important to consider the monthly costs of owning a property, like monthly rates and taxes. If you have a mortgage bond, there are generally extra costs and the financial institution will require homeowner’s insurance to protect the asset until it is fully paid up.

A property professional may give you some guidelines, but it’s important to discuss your option with a broker or an attorney.

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