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Home Insurance explained | A first-time buyer’s guide to comprehensive cover

South Africa's property market is being driven by an influx of first-time buyers as the historically low interest rate makes it more affordable to buy property rather than rent.

Homeowners insurance is mandatory to qualify for a bond as it covers the financial institution’s investment. One of the factors determining the monthly premium is the replacement value of your property. Most financial institutions offer this coverage, however, it is advisable that you shop around for an offer that suits your needs and your pocket best. 

It is important to note that homeowner’s insurance, otherwise known as building insurance, does not cover the contents of your home. Therefore, you will need to also apply for home contents insurance should you wish to insure your personal possessions.  

Everything inside a house that can be taken with you the day that you permanently move is known as its contents, and everything that is fixed - from any built structure like the main dwelling, garage, walls and fences to fixtures like an air-conditioner, pool pump, intercom system and geyser – will be covered under building insurance. Most insurance companies will offer reduced insurance premiums if you combine your home contents, vehicle and building insurance. Click here to understand the benefits and save money. 


Get a quote on combining your building and home contents insurance and save. 

If you’ve found your dream home, then there are some strongly advisable checks you should consider conducting, prior to putting in an offer to purchase.

Marius Steyn, Personal Lines Underwriting Manager at Santam – SA’s leading short-term insurer - suggests conducting a home inspection prior to purchase, then putting in a clause that an offer to purchase is subject to stipulated repairs.

“Remember, your insurer is only responsible for damages occurring from the date of registration of your new home at the deeds office, onwards – not for any prior problems. This means you need to have any damages fixed by the seller, as a condition of your offer. Otherwise, these could become big issues down-the-line.”

Conduct a home inspection prior to purchase, then put in a clause that an offer to purchase is subject to stipulated repairs.

So, what essential checks should a first-time buyer conduct?

You need to know your property is structurally sound, safe, damage-free and up-to-code. Remember, you are fully entitled to include a home inspection clause in your contract, which makes your offer conditional on a home inspection being conducted and the property being found to be in a satisfactory state. However, it’s worth noting that including this clause can sometimes make an offer less desirable for a seller – especially one who knows there are things that need fixing!  


Here are five areas of the home to potentially focus on: 

1.    Check the geyser: Have the geyser inspected by a registered plumber in order to establish the general condition and the adherents to regulatory requirements. The general replacement cost of a standard size geyser amounts to approximately R8 500. When bursting or leaking it has the potential to wreck a room, so you need to be sure you’re getting one in tip-top condition.

2.    Check the roof: Are the tiles cracked? Have the roof inspected by a registered builder to determine the general condition of the roof. The state of a roof and gutters can indicate a lot about the general maintenance of the home as a whole.

3.    Check the ceiling: Most ceilings have secrets. Look especially hard for mould, or maybe fresh paint jobs to hide said mould or damp.

4.    Check the garden: If this is lush and green, be careful. How much will you need to spend to maintain it? Is it drought-friendly given certain parts of SA’s ongoing water issues?

5.    Check for electrical faults: Electrical faults will be identified with the issuing of the electrical certificate, which is the responsibility of the seller. Any repairs or shortcomings identified in this investigation would also be the responsibility of the seller.

Steyn advises having a professional inspection and taking a family member or friend along, who has experience and knowledge in spotting potential structural problems.

A few insurance considerations  for first-time buyers:

1.    Make sure you get homeowners insurance (this covers the building) and house contents insurance (this cover the contents within your home) a few days PRIOR to moving in. Your first seven days in a new house are when you’re most vulnerable, because you’re usually still figuring out security and all your things are in boxes. So, make sure your insurance is already in place. You can also request to have certain security features installed before moving in – especially those that are essential to meet your insurer’s stipulated conditions – like burglar bars, an alarm, etc.

2.    Make sure your home contents insurance is adequate and the equivalent to the new current replacement value of all your items.

3.    Remember you have a duty of care as the policyholder. Should a theft occur, you need to do everything you can to limit the damage – so ensure your front door is fixed and secure if it was damaged through forced entry, for example. Additionally, report any items stolen to the police and your insurer. With the approval of your insurer you do have a prescribed time to do a proper inventory of everything taken.


It is importance to making sure that all damage is fixed up before you move in, as a condition of your offer.
Do not purchase a property (home) with damage. Rather include a clause in the purchase contract that seller must repair the specified damage before registration can take place.

For assistance with your Home and building insurance phone 031-5021922 or click here to go to our website.


Article courtesy of Property24

Why Luxury properties should be insured by specialist insurance brokers

A surge in the number of high net worth individuals (HNWIs) living in Africa is set to inflate demand for prime properties in sought-after South African destinations.

“South Africa is perfectly positioned to benefit from the rise in Africa-domiciled HNWIs thanks to our relatively stable economic and financial environment as well as magnificent residential properties on offer,” says Christelle Colman, MD at Elite Risk Acceptances, a subsidiary of Old Mutual Insure.

The Wealth Report 2021, published by global real estate firm Knight Frank, forecasts a 139% growth in African households earning more than US$100 000 per year between 2020 and 2025, by which time there will be more than 63 400 HNWIs living in South Africa alone.

Another global survey by Luxury Portfolio International reveals that as many as half of HNWIs are planning to buy at least one extra luxury property in the coming 12 months, compared to just one-in-five at the start of 2020. Many of these buyers are choosing South Africa to invest in.

But the rise in demand for prime properties is already being seen in the latest property data.

Seeff Property Group, which recorded its highest-ever South African sales in March 2021, says that one-in-three high value properties are being snapped up by foreign buyers. Seeff reported a 36% jump in sales to such buyers across Cape Town’s Atlantic Seaboard and City Bowl areas in Q1 2021. Transactions included a R45 million penthouse at the Waterfront, a R36 million property in Fresnaye and a R20 million house in Upper Constantia. Similarly, Frankie Bells real estate also says luxury homes are back in demand in South Africa. The property group is seeing an increased demand in the northern suburbs of Gauteng, southern suburbs of Cape Town and eastern and southern coastal regions.

Furthermore, New World Wealth estimates that over 45% of SA HNWIs either live or have homes on estates. An additional 30% have homes in luxury apartment blocks (which have been the fastest growing residential segment in SA over the past 20 years in terms of price growth).

As the demand for ultra-luxury SA homes skyrockets, buyers who are in the market for high value properties should not underestimate the importance of insurance when signing on the dotted line.

Assets with high price tags present unique risks to their owners. There are a number of insurance missteps that the wealthy make, which can cause huge problems at claims stage.

Properties with expensive price tags should be insured by specialist insurance brokers and underwriters with extensive local knowledge and strong financial backing. Selecting an experienced risk partner is seen as the first step that HNWIs should take to avoid the many insurance pitfalls in the ultra-luxury home segment.

The most important aspect of buildings insurance is to value the asset at its correct replacement cost, because failure to do so can result in the asset being severely underinsured and the insurer applying ‘average’ at claims stage.

A 20% underinsurance on a R20 million home could leave the insured R4 million out-of-pocket in the event of a total loss. Insuring the property at too high a value has consequences too, as the insured will end up paying higher insurance premiums, but only be paid the correct actual replacement value in the event of a loss.

Luxury homes must be insured at their replacement cost, not the market value. The insured value must include the cost of rebuilding the primary building and outbuildings; restoring any landscaping features; and to provide for costs such as professional fees and site clearing, to name a few. A common error made by international investors when insuring local property is to assume that rebuilding and replacement costs will be similar to those experienced in their home countries.

Foreign buyers may also be unaware of the challenges that their properties present insofar rebuilding, due to location.

Expert local knowledge such as the ability to source and cost specialist construction contractors and high-end materials are essential when placing luxury homes on cover. A large portion of the purchase price of luxury homes is linked to location and that it is not uncommon for prime properties to change hands for amounts far in excess of their replacement cost.

Approaching an ill-equipped insurer to place a luxury home on cover can be as devastating as making errors on the sum insured.
A specialist insurer who understands the luxury property segment is best-placed to assess your asset values and offer you a competitive, risk-appropriate premium, with no unfortunate surprises at claims stage.

For assistance any with advice and expertise on your luxury home insurance please contact us on 031-5021922 or visit our website


Picture source: Pixabay
Article by
 MoneyMarketing on June 4, 2021 in Financial Planning, Insurance, News, Short-term Insurance,