I have had a Son and his two friends in Nepal for the last 2 weeks. He was two days out of Katmandu when the earthquake struck and two days shy of Everest Base Camp when the avalanche fell. Needless to say, it has been a long two weeks for my wife and I. The good news is that he and his friends are safe in Kat at the moment waiting for their flight out tomorrow.
But all this earthquake talk started my thinking about our insurance cover. Fortunately we don’t have many earthquakes of any size at all and just now and again have tremors to remind us of Mother Nature. We have however, had recent fires in Cape Town that destroyed some beautiful properties.
Fires were in fact the start of what we now know as Comprehensive Insurance, in the 19th Century. Today it includes our household contents and cars mainly. In particular though, is Home Owners Cover [HOC] which is at the heart of what we probably call natural disasters.
The good news is that if you have HOC, you are covered for what are called Fire and Allied Perils which includes damage caused by Fire, Wind, Water, Storm and, thankfully, Earthquake including its cousins, Mudslides and Avalanches. [On a side note, one wonders how many of those poor people in Nepal have HOC]. You can check your policy, but this cover is a general rule for all policies in South Africa as it emanates from the fires that were prevalent in wood-built cities of old.
Some policies may have conditions that you need to understand. For instance, a house in a known flood plain may be refused HOC cover for Water or the owners may have to pay an excess to their premium for such cover. Some policies may insist that the construction of a building is such that it is engineered to withstand a 5-plus earthquake. It’s not a bad idea to understand your policy wording to be very sure of what is included or specifically excluded.
The crux of this conversation has two angles:
– Firstly, get insured for HOC as you should be for contents and cars. Do not delay, the loss you could take in a fire is unbelievable and they do happen. When your bank has a bond over your house, this is a general rule. You probably are insured per course with the bank but may have your own insurance. In the latter case, the bank insists that you let them know that you are still insured once a year or they will reinstate your policy at your cost and include the payment in the bond payment. Bottomline, they have a right to insist, as the bond holder, that you are and remain insured.
– Secondly, make sure your insurance is for the right amount. This amount is the replacement value of your home. Find out from estate agents what your home is worth in the market and ask them if that estimate is close to replacement value. Things change over time and replacement from older areas can be far more expensive than you imagine. Please don’t delay.
Some final thoughts. Often you’ll read that only 30% of cars in South Africa are insured; that’s staggering and not good news for anybody. In turn, house under-valuation is an ongoing problem for insurers. You should also be clear in a sectional title development that your Body Corporate is representing values correctly. Ask your chairperson of the BC to show you the latest policy and values for your unit. As regards Subsidence and Landslip cover this can be a nightmare. Simply, if your retaining wall falls over who pays – once again, be certain that there walls are valued and covered in your HOC. The same goes for sinkholes – make sure you understand your cover.
Our experience in Nepal has alerted us deeply to the things in life that are precious and worthwhile. Homeloan Junction cares about your home and your family way beyond getting your bond approved. That’s why we write these blogs with useful and hopefully, compelling information. Check out your policy and its cover; you may be very grateful you did.
Get in touch with us if you have any questions on this, or anything relating to home ownership.
Yours in Property.