(Gen Z, we’re talking to you)
Gen Z? Buying your first home? You’re not alone! 63,341 South Africans bought property between January and June 2024, of which 3.75% are under 25-years old and are thus very possibly first-time homeowners. If this is you… Congrats on achieving this major life milestone!
Buying your first home can be a big, scary move. (See what we did there?) To make it a little less scary, here are some insurance hints and tips.
Let’s talk about affordability to start with. Deciding what kind of home you want to buy has to be played off against what you can afford. When you do the maths, remember to factor in insurance on top of your bond repayment. When banks grant bonds for full-title and freehold properties they’ll insist that you have comprehensive insurance for the structures on the property. But, remember that you don’t have to accept the banks’ quotes. In fact, it may pay off to shop around for your own quotes and secure your own insurance.
If you buy a sectional title property, the body corporate will take care of the insurance for your buildings, but you have to make sure that you can afford the monthly levy payable to the body corporate. Not only will the insurance cost will be built into it, the levy also covers your responsibility for common property, like driveways and complex security.
This isn’t all though… The true cost of owning your own home must include this buildings insurance as well as cover for your home contents (that’s all the stuff that would fall out if you turned your home upside down) and the valuable portable possessions that you take with you when you leave the property. Yes, we understand that you can’t actually turn your home upside down, so here’s a link to a handy home contents inventory to help you keep track of your contents and their replacement values.
You should review the replacement values (otherwise known as insured values) of your buildings, home contents and portable possessions at least once a year, and more often if you buy expensive items like couches, TVs, designer shoes or bags, and electronics. This will help ensure that you’re not under-insured.
If you’re under-insured for any of these 3 different kinds of insurance, it could mean that a claim would only be paid out proportionately. For example, if your home contents are insured for R40,000 but they’re actually worth R80,000, you would only be paid half your claim amount in the event of a valid claim. When it comes to buildings insurance, your insured value should be enough to repair or rebuild all the structures on your property, including the outbuildings, perimeter wall and swimming pool, solar panels, and other eco-friendly installations, from the ground up, and must also cover professional and municipal fees, demolition charges, waste removal and making the site safe.
When it comes to saving on your monthly insurance premium, keeping all your buildings, home contents, portable possessions and car policies with 1 insurer may result in a lower monthly cost. Enhancing your home security could also lower your premium.
On the subject of security, making sure that your security measures are always in proper working order, being used as they’re intended (like having your burglar bars securely fixed over the windows rather than leaning against a wall awaiting installation), and switched on when you’re not home, can help to ensure claim certainty. This is especially important if your insurer has made your cover conditional on having specific measures in place.
The 2023 report from the Ombudsman for Short-term Insurance, which summarises what policyholders complain about most when it comes to their insurance claims, shows that the second-highest number of complaints (25%) for the year related to buildings claims that insurers rejected. Here, the most complaints (44.7%) were related to claims for ‘acts of nature’ that were rejected on grounds of ‘gradual deterioration, lack of maintenance, wear and tear, and defects in design or construction’. In other words, the damage being claimed for could have been prevented if the homeowners had exercised due care, as described in their policy documents.
When working out your budget, you also need to factor in potential rises in the repo rate (also known as the interest rate) which will in turn increase your monthly bond repayment if you weren’t able to negotiate a fixed rate when finalising your bond, as well as the costs for electricity, water, and municipal rates and taxes.
Yip, we know it’s a lot. But taking all these costs into account upfront will go a long way towards reducing financial stress and ensuring happy memories down the line in your home-sweet-first-home.
Click here or WhatsApp us on 0860 50 50 50 for a commitment-free insurance quote.
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Psst… This blog provides general info only, and doesn’t count as financial or product advice from King Price or our legal and compliance experts. Remember, all our premiums are risk-profile-dependent, and T’s and C’s apply. Our most up-to-date KPPD (policy wording) can always be found here.
Our website T’s and C’s can be found here.
