The importance of homeowners insurance

Buying a home, while exciting, is not as straight-forward a task as it may look. There is a lot of admin and paperwork involved. And between signing the offer to purchase and having the bond registered and transfer taking place, there are various other things you should put in place. Like homeowners insurance. 

When you apply for a bond with a bank, you are encouraged to take out homeowners insurance to protect your assets. Here's what you need to know. 

What is homeowners insurance?

Homeowners insurance is not just one thing - it's a number of different types of insurance. Depending on which one you take, it's a type of insurance that will protect the homeowner against loss, damage, illness or death. 

"There are different types of homeowners insurance for homeowners," says Kim Hogben, Franchisee Leapfrog Durban Central. "Be sure to learn which ones you need before you purchase a new property." 

There's building insurance (which is the one that banks want you to take out). Building insurance covers instances of structural damage to the property. Policies under this often also cover damage from natural disasters. 

Another type of insurance for homeowners is bond protection, which will cover the bond when you are unable to. For example, in the event of a death of a spouse if the bond is registered to both of you, or in the event of illness. 

Additionally, there is also home contents insurance that will cover your belongings inside your home. This includes electronics, appliances, jewelry and more. 

Hogben advises: "For all types of insurance, be sure to check your policy carefully to see what you can and can't claim for. Too often people think they are covered for something only to find out down the line that they are not." 

When should you take out insurance?

"When you are in the process of finalising a purchase, it's advisable to look into building insurance and bond protection as a first step," notes Hogben. 

As mentioned before, banks often want you to have building insurance in place before they finalise the bond on your new property. This is to protect both them and you. 

Household contents insurance can be taken out once you move in. Be sure to give a detailed list of the high-value items in your home, so that you are adequately covered should it get damaged in the home or stolen. 

Where do you start looking for insurance? 

There are many companies that offer all different types of insurance. If you already have vehicle insurance, check with your insurance company if they will cover your home, too. The chances are that they will and often they will bundle your policies together. 

You can also chat to the bank that is offering you the home loan. They often add the insurance as a line item in your bond agreement. You are not obliged to accept this, so do look out for it. If it's the best quote that you receive, then it's worth looking into. 

For many people, insurance can feel like admin or a chore, but it's necessary to protect your investment. You are spending a lot of your hard-earned money on a property, wouldn't you want to ensure that you are covered for any incidents or accidents? 

"Insurance provides peace of mind," explains Hogben. "We may not enjoy the process of applying for it or even begrudgingly hand over the payment every month, but at the end of the day we know it's a necessity. And ask for an evaluation every year or two as the value of your home will increase over time" she concludes.