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ARTICLE BY LIAM DOYLE

Short-Term Insurance: It Is Essential!

Insurers provide limited coverage for an agreed monthly premium. This means that in the event of a disaster or accident, our needs are covered. This mitigates the risk that we all face as we live our lives.

Short-term insurance covers the loss of objects and belongings. Long-term insurance products cover persons and lifespans.

Long-term insurance pays out in the tragic events of loss of life. It also pays out if someone is no longer able to work. These all depend on the exact type of product that is in place.

Short-term insurance pays out in the unfortunate event of loss or damage of possessions.

Life often throws unavoidable and unforeseen risks at us

So much of life is unexpected. As you accrue possessions, there are responsibilities and risks that come along with ownership. Owning valuables, assets and property carries with it risks. The best way for owners to be secure while enjoying peace of mind is to place this risk in the hands of a third party. The third party is an insurer. Having a reputable insurer carry the risk that your property can face is a wise decision. If your property suffers loss or damage, you can be covered with the right short-term insurance product.

There are four short-term insurance products that are most common. They are personal liability insurance, vehicle insurance, household insurance and homeowner’s property insurance. The first two were discussed in this article. The other two will be briefly discussed here.

 

Homeowner’s Property insurance

Household insuranceHomeowner’s property insurance is often a condition for taking a home loan. This makes it one of the most common types of short-term insurance.

These policies cover the physical structure of a home, and its fixtures. These are the immovable structures of a home. Building insurance includes the walls, roof, geyser, fitted cupboards, windows and boundary walls. Outbuildings, lapas and built-in appliances such as stoves are covered as well. Safety structures such as burglar bars, electric fencing, beams and CCTV cameras would also be included.

The insurer covers the balance on any damage sustained, after you have paid the predetermined excess. This is in the event of various circumstances. If the home has been damaged due to breakage, impact or theft. It is also applicable in the case of a leak, explosion or fire. Floods, landslides, and other natural disasters are also covered by these policies.

How much building insurance should I have? 

A homeowner should have enough coverage to rebuild their property from the foundation to the roof. With this amount in place, you will also be able to cover any repair that might be necessary short of that total destruction.

This will mean you must accurately calculate the replacement value of your home. This will ensure that you are adequately covered. No one should be under-insured, but one can avoid being too heavily over-insured as well. As you make improvements to the property, you must adjust your policy accordingly.

A bank can insist that a client take out homeowner’s insurance when applying for a bond. What they cannot do is force any of their customers to take a particular product. This would be in contravention of The Financial Advisory and Intermediary Services (FAIS) Act.

Morebo is able to assist you to find the best homeowner’s insurance product for you. Unfortunately, it has been all too common for homeowners to be saddled with a product that is too expensive for their needs. In such a case, the client could afford to make the bond repayments, but it was the homeowner’s insurance product that had been included in the repayment that made the monthly costs untenable.

 

Household insurance

Homeowner’s property insurance covers the structure that is lived in. On the other hand, household insurance covers the contents kept inside the home.

The main focus of household insurance is on the clothing, furniture and electronic appliances inside a home. You can, however, specify all items that you want to include in the policy. Tablets and cell phones, for example, would be listed with their models and/or serial numbers and values. This does impact the monthly premiums but ensures that the items are covered.

These items are covered by the household insurance if they are damaged from a geyser burst or leak, in a natural disaster or impact. In these events, you will be paid out the amount that they were insured for. They are also covered if they are stolen. Third party liability with regard to your possessions is also usually included in standard policies.

It is also possible to get cover for accidental damage as well. For example, this would be in the case of spilling water on a flat-screen TV. If the TV were damaged, the accidental cover would be applicable. Accidental damage cover would be an extra cost.

Household insurance is NOT automatically covered in homeowner’s insurance!

It should be clear that the household contents require a separate policy from the building insurance. You need to make sure that you have been correctly insured for your belongings. As many as one in three homes in South Africa are underinsured by as much as 30%. Do not make the mistake of thinking you have adequate insurance when you do not.

As a homeowner you must confirm that you have suitable insurance for the contents of your home. You do not want to find yourself in the position that you cannot replace your belongings in the event that they are damaged or stolen. 

Why Tenants Should Definitely Have Household Insurance 

Many tenants mistakenly think that their belongings are covered thanks to their landlord’s building insurance. As we have seen, this is not the case. The landlord would have building insurance in place. If anything happens to the building in the scenarios listed above, it will be repaired or replaced.

But the possessions of the tenant are not insured this way. If anything happens to the tenant’s belongings, the tenant will need to replace them at their own cost. For this reason, they must put their own household insurance in place. This will protect them in the event of theft or damage or other loss.

Even many tenants who are aware that their belongings are uninsured think that it is unnecessary if they live in a secure complex. But this is a mistake. It overlooks the unfortunate scenario where a geyser irreparably damages their belongings. Or if another resident carelessly starts a fire in the complex or apartment building. There are many such scenarios that happen.

For these and other reasons, tenants must protect themselves from loss with a household insurance policy in place.

Cash back benefits on property and household insurance policies 

Quite a few insurers also offer cash back on these policies. This can be applicable if you do not claim on the policy for a certain amount of time. You might be eligible to receive back a percentage of the premiums that you have paid in that period of time.

For any and all questions about short-term insurance, contact Morebo! 

Today is the day to ensure that your short-term insurance in order. Why wait another day uncertain about whether your requirements are taken care of?

We will assist with all your short-term insurance needs. Whether you need homeowner’s property insurance or household insurance, call us. Our expert consultants will tailor-make a solution to your specific household and/or homeowner’s insurance needs. We will make sure that you have the best products for your specific needs. We are also experts in personal liability and vehicle insurance. Addressing the individual needs of our clients is our top priority.

Bibliography/Further Reading:

https://www.news24.com/w24/work/legal/how-to-insure-your-home-dos-and-donts-20160223

https://www.privateproperty.co.za/advice/property/articles/tenants-beware-your-landlords-insurance-does-not-cover-you/5547

https://www.privateproperty.co.za/advice/property/articles/what-homeowners-need-to-know-about-insurance/5375

http://www.acts.co.za/news/blog/2017/02/bank-pays-home-owner-r300000-after-being-caught-in-insurance-ripoff

https://www.news24.com/fin24/Money/is-your-home-insurance-really-covering-you-20181103

https://www.news24.com/w24/Work/Legal/how-to-insure-items-you-use-outside-your-house-20160413

https://www.news24.com/fin24/finweek/opinion/insurance-tips-for-successfully-renting-out-a-property-20160519

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