Saving money on your homeowner’s insurance premiums isn’t really a saving when you are under-insured which will result in your payout being less than it will cost you to replace your home.
As a property owner, you need to make sure your building is properly insured. Building insurance is one of the cheapest types of insurance around, particularly sectional title insurance rates. You need to consider your building replacement cost carefully to ensure it is correctly reflected in your sectional title policy or home owner’s insurance policy. As a rough check, do the following simple sum to check the value of your house or flat.
- Ascertain a building rate per square metre for your type of building. To do this, consult a quantity surveyor, look up published building rates or consult a valuer (not an estate agent).
- Then set out a rough estimation by multiplying the rate by the area of the building.
- Next, add the professional fees, VAT and the cost of removing the debris.
Compare the figure you obtain with the figure on your insurance policy and you will know whether your building is under-insured. If you are under-insured and you hold separate title, you need to increase your cover with your broker. Mare sure your broker knows all about your building so he or she can advise you better. Let your broker know if you live on a slope and, as a result, if you think there is a risk of subsidence or landslip.
If you live in a sectional title complex, the trustees must make sure the buildings are insured for their full replacement value. However it is up to you as an owner to check that the figure allocated for your unit (your section plus your share of the common areas) is enough. Any home improvements you have had done need to be taken into account, whether your home is held under sectional title or separate title. Also, tell your broker if you have expensive chandeliers, air conditioner units, or fitted extras like a solar heating system or wind generator.
If you live in a sectional title environment, ask the trustees when the buildings last were valued or how the figures were determined. If it was done recently, you are probably safe unless you have made improvements to your unit over and above the norm for the complex where you live.
A schedule of replacement costs should be presented at the complex’s annual general meeting. Do your sums, while remembering that your unit’s replacement costs equal your section plus your individual share of the common property.
Contact Addsure – the leaders in Sectional Title Insurance – to get advice on the most comprehensive insurance cover for your peace of mind. Contact Addsure head office on 021 551-5069.
Written by Mike Addison from Addsure