Personal Insurance in South Africa

House insurance

Personal insurance can be confusing. Additionally, most South Africans do not regard it as an essential expense to insure their personal assets. In South Africa, less than a third of all motor vehicles on our roads enjoy insurance. However, contrary to this unpopular belief, a homeowner (or even a renter) and motor vehicle owners must consider protecting their property through a personal insurance product.

What is Personal Insurance?

When you purchase personal insurance, it can include your private home, home contents; motor vehicles; watercraft; motorcycles, trailers and caravans; artwork; high valued jewellery collections; bicycles, sports equipment and personal liability. This will protect you against financial loss when a catastrophe like a fire, storm, flooding, theft or loss or any damage from accidental events or when legal action is taken against you for damage to another person’s property and or injury or death of a person due to your negligence.

The benefit is that you will have a financial boost if you experience any of the above events. 

Most times, the homeowner purchase household insurance together with a house contents policy. This is important as it covers all the damages and loss of your belongings such as furniture. 

It is important to note that having homeowners insurance is mandatory for people whose property is financed by financial institutions. However, it is not a must for you to accept the financial institution’s insurance offer; you have the luxury of choosing the one that fits your requirements. It would be best if you considered purchasing insurance from the same insurer, insuring your vehicle and other possessions. This way, you stand a chance of getting cheaper options for insuring multiple assets.

What are the different types of Household Insurance in South Africa?

Homeowners Building Insurance

This policy covers the general structure of a house from natural disasters such as fire, storm, water, lightning, and floods. Different insurance providers provide different extended cover options. They can include cover for additional structures such as greenhouses, swimming pools, thatched lapas, tennis courts, green energy additions like solar panels and geysers.

You will have peace of mind knowing that your most significant asset enjoy cover if any catastrophe occurs. On the contrary, if you fail to cover your house using this insurance and an accident occurs, you stand a chance of losing and an additional burden of paying back the mortgage. 

Household Contents Insurance

If you can imagine you could turn your house upside down and shake it, everything that will fall out is deemed household contents. The items you will pack into a removal van when you move are household contents; furniture, clothing, garage contents, household appliances, etc. 

Fire, storm, water, flooding; lightning; explosion and theft are just some of the events that household contents can cover. Some insurers offer options to include extended cover for accidental damage and power surge, as an example, and your Phoenix Insure advisor will share the benefits and detail of the extended options available.

Personal Valuables Insurance 

The building and home contents insurance cannot offer cover for all assets. These items are portable and or carried on you outside of your private home, for instance, mobile phones, laptops, handbags, bicycles, and jewellery. 

This cover is further divided into two options the specified items and non-specified items. The specified items are mainly used to cover valuable individual items such as mobile phones, laptops, watches, and jewellery. On the other hand, the non-specified covers a list of basic items, handbag contents etc. Should you suffer loss or damage, you will receive a specific amount subject to the policy condition. 

Personal Legal Liability Insurance 

Your policy will, in most instances, automatically include personal legal liability cover. This will protect you from any legal action by a third party that could hold you liable. This would be for damage to a third-party person’s property or death or injury to any third-party person due to your negligence. 

Motor Vehicle Insurance 

Motor vehicle insurance is probably best known in South Africa. All types of vehicles can be insured for accidental damage, fire, theft, and third-party motor liability.

Your policy can extend to insure any extra features you installed on your vehicle. Caravans, trailers, and motorcycles can be added to this section of your policy. Added benefits you can select include car hire, excess waiver and road assist as value-added options. 

Why should I buy Personal Insurance? 

Most South Africans do not realize the importance of taking up a personal insurance policy until it is too late. Below are some of the importance of insuring your household.

Your house will be covered against natural and human-made disasters. 

Some factors that can damage your house are beyond our control. Disasters such as floods and earthquakes can occur at any time and damage your home extensively. However, with a household insurance policy, such damages will be compensated. 

Besides natural disasters, your home can also be subjected to damage by human-made disasters. These include burglary, vandalism, theft, and fire. This will be compensated by your personal insurance too.

If needed, temporary living expenses can be covered as well.

Your house can undergo severe damage to the extent that it is deemed inhabitable. There is a standard part within the household insurance known as the additional living expense. The coverage helps you to cover the increased costs incurred when you temporarily not living in your home. This is effective until the house repair is completed. However, it is important to note that the coverage is only effective if the damage was caused by a covered loss. 

You are protected against liability.

Liability might arise from you causing accidental damage to a third party at your private residence. If you have personal insurance, the policy will protect you against any legal claim made against you. The value of this cover is priceless as attorney costs are often more expensive than the reward made in court for the actual loss or damage.  

What is covered by household insurance?

  • Damage caused by fire, lightning, explosions
  • Damage that was maliciously caused
  • Television aerials
  • Satellite dishes
  • Damage caused by storms, floods, hailstorms, or wind.
  • Stolen property
  • Damages caused by earthquakes
  • Damages caused by wild animals; however, there may be limitations  

Some general exclusions on Personal Insurance cover

Yes, a personal insurance policy covers several accidents and risks. However, some instances will make the insurer reject your claim since they are not covered:

  • Damages caused by pets. This includes scratches, dents, and defacements. 
  • Some types of thefts. There must be proof of forceful and violent entry into the property. 
  • Damages arising due to poor maintenance of the property. 
  • Damages caused by weeds or plant roots
  • If the home security is not up to standard
  • If the house was not occupied for a long time. 

How will my insurance premium be calculated?

Your premium will be dictated by factors such as:

  1. The overall cost of rebuilding the home. 
  2. The material used to make your home. Masonry houses are not so much prone to fire and therefore offer less premium.
  3. The proximity of the house to resources and services such as a fire response station
  4. The general state and condition of a home. 
  5. The most common claim in the neighbourhood. 
  6. The number of hazards within the house. For example, the presence of a furnace is a fire hazard.
  7. Aggressive pets; unfortunately, this will not work in your favour since aggressive pets are seen as injury risk to third parties. 

Personal insurance has gradually switched from being a luxury to a necessity. With many insurers out there, it is just about choosing the one that matches your requirements. Our qualified advisors at Phoenix Insure will assist you in making an informed decision. 

Disclaimer:

This blog does not constitute financial advice. The content is intended to provide information for educational purposes. We recommend that interested parties contact Phoenix at the contact details listed or their financial advisors for a comprehensive review and needs analysis followed by the required record of advice.

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