Understanding Home Contents Insurance

Understanding Home Contents Insurance

Home Contents Insurance covers your kitchen appliances, jewellery, furniture, state-of-the-art TV, and even your clothing. With high crime rates in South Africa, can you imagine how expensive would it be to replace these items if you were to fall victim to crime or natural disasters?

Home Contents and Building Insurance are not the same. Building Insurance is compulsory if you have a mortgage and Home Contents Insurance is optional.


Home Contents Insurance

What is Home Contents Insurance?

When you take a moment to contemplate all the valuables inside your house, you’d want everything covered from electronics and appliances to furniture and décor. You would want to cover everything at a price you can afford. If you own a property and have value material, home and material insurance will help to protect your assets in any unexpected and unforeseen situations that could make your home and/or belongings unusable.

Home and material insurance are two different insurance schemes that aim to cover accidental harm to your house or goods. As with many forms of insurance, each home and content policy is different so it is important to understand exactly what sort of cover you want to purchase.

Users often equate property and construction property with home products, which can be considered homeowner insurance too. A clear example of understanding the difference is to think of the disparity between the rental property owner and the occupant. A tenant owns all the furniture inside the house while the owner (landlord) owns the actual construction of the building and everything around it.

House insurance does not provide provisions for home contents. And if you’re renting, do get protection on your own home contents. If you’re a landlord you’ll also need coverage of home material and extra safeguards against unintentional harm and liability. Then the occupant will protect the home contents and the real structure from the landlord. Therefore everything inside a house is known as its contents, and all that is built-from a garage and pool pump to walls, fence and geyser-comes under protection for construction.

What does Home Insurance Cover?

Home insurance provides protection for expenses associated with rebuilding or restoring damage incurred by such incidents such as fire and burglary to your home. The degree to which you seek compensation depends on the type of insurance you are buying. A policy usually offers protection for harm to property that only happens as a consequence of the circumstances specified in the policy.

Circumstances mentioned in a policy may generally include: 

  • Robbery 
  • Fire damage 
  • Losses to water 
  • Explosion
  • Lightning 
  • Earthquakes
  • Malicious Damage

When you want these things to also be protected for unintended harm-e.g. when you spill coffee on your expensive sound system-then you can take an optional cover.

Usually, the personal items that you bring with you such as your handbag, shoes, sports equipment, etc. are protected under ‘all risks.’ And you need to define the things in your policy when it comes to computers, mobile phones, jewellery, laptops and bicycles. Specifying items means listing each item with its model or serial number, and its weight.

Stay up to date with home content valuations

Many people just do a home contents appraisal when they take out insurance but fail to change the value over the years. That is why statistically one house in three is protected by as many as 30%. If you need to claim, your policies will pay out on a pro-rata basis and you will get less money to cover your product than it costs. 

Home Content Policy protects all things you ‘d carry with you in your house if you were to pass. Replacing your home’s contents will add up to a huge sum of money. Precious objects are vulnerable to loss, theft or injury, so it makes sense to properly insure them so you won’t be facing a big bill if anything happens. 

Insurance on the home contents includes

  • Cover for harm or loss of household goods and personal belongings 
  • Cover for fire, lightning, power surge, explosion, malicious destruction, floods, geysers, equipment or pipes bursting or overflowing, break-in and robbery; 
  • Cover food which is rotting due to power failure or if your freezer breaks down 
  • Washing cover and/or garden furniture stolen
  • Cover in case of you and/or death of your partner, if caused by a fire or break-in at your home
  • Cover for the belongings of your domestic workers or visitors (only if there is evidence of harm caused by a break-in) 
  • Landlord responsibility 
  • Liability for domestic workers, whether he/she is injured or dies at home while working
  • Home content insurance can also protect you if, for example on vacation, you take things out of the house. 
  • The insurance covers your own belongings and those of your friends who live with you. This does not protect somebody’s belongings temporarily living with you.

You don’t have to take out premiums on your home belongings. It’s a good idea to do that, though, because if any of your material is lost, stolen or damaged you will have to pay to repair it. 

Content insurance protects things in your house if you ‘re a renter or a homeowner, you ‘re going to want to protect your land. There are many items that make your house a home, and the material insurance part of your policy will help replace any of your belongings if they are lost, stolen or destroyed, depending on the level of coverage.

Insurance plans on content usually provide ‘replacement value’ or ‘new for old’ protection. Fresh for old cover means the insurer must swap new products with the old belongings. Content insurance may have several variants offering extra coverage for unique, important objects or portable valuables such as computers and cameras.

Why is Home Contents Insurance important?

It protects things within your home from theft or injury. This includes things like your furniture, electronics, and appliances that belong to you, or any member of your household living with you. This also includes workshop furniture, household dwellings, storerooms and outbuildings, as well as all of your garden and leisure equipment.

How much cover do you need?

You will be responsible for the amount it costs to replace all of your old belongings with new ones. To ensure that your home content is completely covered and not underinsured, it’s necessary to measure the value of all your belongings accurately. The easiest way to do this is to move your house from room to room and list anything you consider a possession, not just your most valuable items.

Calculating home contents insurance?

  • Travel from room to room, listing all of your belongings 
  • Estimate the value of each possession; 
  • Get up-to-date jewellery valuations and other useful pieces 
  • Apply the expense of all things to achieve your estimate

High-risk items: 

  • Antiques
  • Art
  • Electronics
  • Watches and engagement rings 
  • Furs, and other lavish garments 
  • Music instruments 
  • Collections of stamps, coins and medals
  • Clocks and Watches 
  • Rare collectable items

One would have to provide evidence of how much the item will cost in today’s market and provide documentation to show the value of the product and likely provide evidence of purchase. You may need to pay extra under some cases to provide compensation for ‘accidental damage’ to your house. It is critical that you review the Consumer Disclosure Statement for policy inclusion details, limitations and exclusions before making any judgment on transactions. 

What you possess is more than things. Creating a collection of cherished possessions takes a lifetime so it is vital to ensure that you have ample financial resources to restore or replace any of these objects should they get lost or destroyed. This is maybe worth considering if you have kids or pets. 

You may also have to pay more to cover items you carry out of the house, such as cameras or jewellery, or to cover an item of special value. The content of a freezer or mobile phone may not be protected by your policy, and there may be an upper limit for one item.

Many policies bring a surplus number. Most of the policies provide new cover for existing. That means you get the full cost of replacing things that get misplaced, stolen or damaged. But, if you need to make a claim, certain policies can only give you the value the things are actually worth. Before you take it out, make sure you know what your insurer is promising to substitute.

Insurance on home products will also pay a lump sum if you die from a home fire, robbery or crash. It will even protect you when someone is hurt or dies when they visit you.

Home contents insurance if you’re renting

If you are a homeowner, please check to see if you are responsible for insuring any material belonging to your landlord, because you might be liable for replacing any things missing or harmed. For example, if you’re renting an object, a TV, check that you need to ensure that.

Which policy should you get?

If you own a property, you need insurance for the building to protect the construction as well as insurance for the personal belongings inside your home. If you own a flat, this will make insurance more difficult. With Sectional Title it is the Trustees’ responsibility to ensure that the Body Corporate is covered for the house, so talk to yours and find out exactly what the condition of your unit is.

Taking out a home contents policy

You need to figure out how much coverage you need, depending on the cost of replacing all of your belongings, before you take a policy out. Most people are under-insuring themselves, so make sure you have anything, including carpets or flooring, and garage or shed contents. You may want to get several quotes before selecting a strategy.

Sum-insured and bedroom rated policy 

Home content insurance plans are usually often carried out on the number of rooms in your house. Those are classified as bedroom rated policies. The overall worth of the items and possessions you own can be dependent on them. Those are called sum-insured policies. 

Premiums may be higher if you carry out a limit on the number of rooms that have been worked out as they can give more protection.

You will need to compare: 

  • What does every policy cover, and what are the exclusions 
  • The bonus you need to pay 
  • The amount you’ll have to reimburse yourself for any waste 
  • The no-claims benefit that rises every year unless you make a claim 
  • Some more requirements, such as leaving your home unoccupied for a long period of time.

You must give as much detail as you can to your insurer about something that could affect their decision to insure you, or how much to charge you. You need to inform them about any changes in your circumstances. 

Problems with home contents insurance claims:

  • If you are insured the insurance will only fund a portion of the claim 
  • You can have a limit to what you can demand a single item and you will have to pay a surplus 
  • You won’t be compensated for acceptable wear and tear of an object if you haven’t taken out a new one for old policy 
  • The policy can specify that the insurer will provide a substitute item instead of the money to buy it 
  • If one element in a set is broken, you may not be able to find a replacement that fits. When this occurs, the insurer will pay the damaged item and replace the products that are not damaged with an amount

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