By: Siyakha Masiye
BECOMING a homeowner is arguably the most significant step towards building wealth and securing your financial future. As riveting as the experience can be, the next step to all things adulting can also be just as daunting. All things considered, after buying the actual home, the next decision to make is how to protect your new asset against any risk factors. This is where insurance comes in as one of the most effective buffers against life’s unexpected twists and turns.
Buying property involves a long-term commitment, so when it comes to managing risk, there simply is no “quick fix”. Risks come from many different directions, especially in South Africa, which has its own unique socio-economic makeup and challenges. To manage risks effectively, homeowners need to implement a variety of safety measures and responsible living practices. Insurance is a vital component of this mix.
Protect your backup energy supply
First of which relates to a unique South African current challenge – load shedding. Scheduled blackouts have been part of the South African reality since 2007. In recent years, with the deterioration of energy infrastructure, insufficient generation capacity and fuel supply issues among other issues, the frequency of load shedding will increase substantially, particularly as weather temperatures start to drop ahead of winter.
Load shedding has been a disruptive force within households, with many homes being compelled to invest in backup and alternative power supplies to reduce food waste, maintain security systems and sustain their livelihoods. From an insurance perspective, this has a few implications that new homeowners need to be aware of.
Generators and inverters were pieces of machinery that were typically associated with commercial enterprises, but with the rise of load shedding these alternative power supplies have become part of our everyday lives. In light of this, homeowners need to understand how owning this kind of equipment will affect their insurance premium as well as their requirements in maintaining it.
For example, solar panels, which are fixed to a rooftop, will typically be included as part of a buildings insurance policy, while non-fixed devices such as an inverter will fall under the owner’s home contents insurance policy. In both these cases, there may be certain conditions for ensuring ongoing coverage.
Understand your environmental vulnerabilities
Insurers base their clients’ premiums on each individual’s unique risk profile, part of which involves the geographical location of the property. Some areas are more prone to certain environmental risks. For example, living close to a forested area or at the foot of a mountain will make the home more prone to the risk of wildfires. Likewise, coastal regions, particularly those with low-lying terrain, are often prone to flooding, especially during storm surges and high tides.
In this regard, insurers can offer valuable guidance on which natural disasters to be on the lookout for and what to do to prevent unnecessary losses. From an insurance perspective, it’s important for homeowners to understand which weather-related events they do have cover for, and which may require additional clauses or endorsements.
Keep an eye on crime
The location of a property also has implications in terms of the level of crime associated with the area. Part of a homeowner’s risk profile will be determined by the level and type of crime that typically occurs in their area. Crimes like hijacking, home invasion, burglary and theft are higher in certain areas when compared to others, which may in turn affect the cost of insurance cover.
To protect themselves against this, homeowners may opt to install security systems such as electric fencing and a home alarm system. Installing these kinds of risk management methods may reduce the cost of the premium. However, homeowners who do employ these systems also need to ensure that they are properly maintained and serviced to avoid delays or complications in the event of a claim.
Find solutions to cover the exclusions
Another factor that homeowners need to consider is which exclusions apply to their insurance policy. An exclusion refers to a specific condition, situation, or type of loss that is not covered by the policy. Exclusions are typically outlined in the insurance policy document and may be listed under a separate section or subsection.
It’s important for homeowners to understand exactly what these exclusions are. There are a few standard exclusions that apply to most South African insurers. Some of these ‘uninsurable risks’ or risks with very limited coverage options include national grid failure, civil unrest and losses related to pandemics like Covid-19.
Exclusions will however differ depending on the insurer and the individual policy. It is therefore crucial that homeowners understand which exclusions apply to their policy and to take additional precautions in safeguarding themselves against these risks. Being proactive about this can go a long way in preventing scenarios where homeowners claim for damage or destruction only to find that they are not covered for that specific type of event.
* Masiye is a spokesperson at MiWay Insurance.
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