Why do you need household insurance? Think back to when you first furnished your house or apartment. The cost of the oven, refrigerator, freezer, air conditioners, beds, couches, dining room table and chairs. The list just goes on and on. A house is full of costly items. And what about all of your clothes, laptops, pictures, and many other valuables?
Now imagine that it’s all gone due to a fire, flood, theft or other tragic accident. Most people like to think that these things won't happen to them, but unfortunately, the cold truth is that eventually it will and when it does you can be one of two kinds of people: those who have household insurance, or those who don't.
The South African Police Service has released crime figures for 2012 – 2013. Robberies while people are present in their homes increased an alarming 7.1% over the previous year. That’s 17,950 reported robberies by armed gangs, which means an extra 1,184 homes were victimized over the course of the year.
Here’s a scary statistic – on average 49 homes were robbed every single day of the year!
Too many families have been caught unprotected when an unfortunate event occurred and it’s often a double tragedy because the simple and relatively low cost of acquiring a household insurance policy could have prevented their aggravation and help them rebuild their lives.
What is household insurance?
Household insurance is insurance coverage for the mobile contents of a house. This means for the contents that can be moved, unlike the actual walls of the house. So things like clothes, furniture, electronics and etc. Household insurance is also known as "house insurance", "home insurance" or "content insurance". Be careful with the terms though, because some insurers use the terms house or home insurance to refer to insurance for the physical structure of the house to the exclusion of coverage for the possessions inside although this is usually called "building insurance".
Why do I need household insurance?
Besides providing coverage for loss in case of disasters such as fire, floods, etc., household insurance policies can offer protection in case of theft or vandalism which unfortunately is very common in South-Africa (See above stats). While it’s not likely that a thief will take off with your oven, think about all of the expensive, and easily stolen, items around your house. Laptop computers, tablets, jewelry, art – all can easily be stolen by determined thieves.
What are the types of household insurance
There are primarily two types of home insurance in South Africa:
Contents insurance: covering the movable contents of a residence.
Building insurance: covering the physical structure. This would be covered by a “Home Insurance” policy (remember, the same name may signify something else to different insurers). This article focuses on insurance for the contents of the house, not the physical structure.
What’s the difference between Comprehensive or Limited coverage?
Comprehensive household insurance policies usually covers damages due to the following: break-ins and theft, vandalism, fire, short circuits, lightning strikes, power surges, earthquakes (it could happen!), explosions, water damage from causes such as storms, floods, broken pipes.
Tip: Even if you have a comprehensive policy, check whether there are limits to the amount the policy covers. This is very important if you own valuable art or jewelry.
Limited household insurance policies will specifically exclude specific causes such as flooding, etc., resulting in less expensive policy costs. Before choosing such a policy it’s prudent to weigh the cost savings against the risk you are taking on yourself by declining coverage for other types of risks. If you live in an area that never is at risk for a certain class of catastrophe, it might be an acceptable risk to decline coverage.
Some insurers offer discounts for those who live within secured areas. It’s worth asking any prospective insurer if you qualify for a discount. As with all insurance, prices vary, so check several policies to compare household insurance quotes.
What does the household insurance policy usually include?
A typical household insurance policy will provide protection in case of loss, but as always, the devil is in the details. As we have mentioned, depending on the policy selected, coverage may include theft, fire, and/or water damage.
Never assume that a particular type of loss or damage is covered unless it is clearly listed in the policy. In the past, some homeowners in South Africa thought they were covered for floods because their policy mentioned water damage, and only when they tried collecting for a flood did they discover that they were covered for burst pipes but not for floods. Reading the fine print will help prevent any potential misunderstandings and losses.
Household insurance inventory
The ability to prove the extent of losses will ensure a smooth and less painful application process in case of loss. This requires preparing and perhaps submitting a complete inventory of the household articles being covered.
You’ll need to take time, going room by room, listing each and every item you wish to include for possible reimbursement. Ideally, also take photographs to back up your claims.
Jewelry should be appraised by a professional, especially older, inherited items which require the eye of a professional to determine their value.
Don’t forget any valuable items of clothing. That designer handbag or custom tailored suit cost a bundle, so include it! Saving receipts will also help.
Finished! Relax, just make sure to update your inventory every year to keep it up to date with any new and substantial acquisitions, and to delete any items you no longer own. If the list is out of date, a claims processor might cause trouble when a claim is filed. An up to date inventory will help prevent this aggravation.
Summary
Compare several content insurance quotes to help select the best policy, but also make sure you know what each household insurance policy actually covers. Home insurance will protect your family from loss, but only if you make the effort to choose the correct policy and coverage for your needs.
A final tip: it is extremely important to know the correct value of what the policy is covering. Insurance policies typically have maximum limits. If you undervalue your possessions, you aren’t fully protected. If you overvalue them, you are wasting money purchasing unnecessary household Insurance coverage
