Your home insurance coverage should not necessarily be what you paid for the home. Land values are calculated into the final sales price
and should be considered when insuring the structure. A good idea is to contact local builders and ask them what new home construction cost,
per square foot, is going for. Take that number, multiply that times your square footage and that is the amount that your home should be
insured for. Companies will not pay more than what it is going to cost to rebuild the home, so make sure you are insured correctly.
- Make sure you are covered for at least 80 percent of the cost of replacing your household. If you're not, it could hurt you even if
your house content does not need to be completely replaced. Let's say your home would cost R500 000 to replace and you're insured for only
R250 000, half of the replacement cost. If you have a R10 000 loss, you would get only half of that amount, or R5000
- The excess is your portion of the claim that must be paid before the insurance company pays for the claim. The lower your excess is,
the higher your premium will be. Excess can range anywhere from R1000-R5000 or more. The majority of homeowners will carry a R1000 excess,
but the savings one can receive by raising your excess to R5000 could be significant - even up to 20%. It doesn't take too many claim free
years to make up the difference between the two excesses, but remember you should never raise your excess to a level that you could not
afford to pay.
- Think twice before calling your insurance company with small claims for minor home damage. Homeowners have faced much higher premiums
after putting in only two claims. If it's a loss you can handle, take care of it yourself.
- Don't be afraid to shop around, home insurance shopping is easy. Online insurance shopping is even easier.
|
