Investing in property is a long-term commitment and you simply can’t know what will happen during the lifetime of your loan. That’s why insurance is so important.
While the National Credit Act specifies that your lending institution cannot force you to take up its own home owner’s insurance product, it can insist that you take some form of this cover. This is because, until you’ve repaid your debt in full, the bank has paid for the property and runs the risk of something happening to it.
This compulsory insurance covers the structure of the buildings on your property, the permanent and fixed fittings, alternative accommodation after an insured event, concealed and unconcealed water pipes and even the geyser and maintenance on geyser components.
Absa may make a life policy a compulsory condition of its loan to you. The policy must then cover the total home loan balance. Should you take up an Absa life policy, your premiums will form part of your home loan monthly repayments.
Household contents insurance covers your personal possessions such as furniture, appliances, carpets and curtains. While this type of cover is optional, it’s worth thinking carefully about what you would do should you lose all your possessions to theft, acts of nature or another unpredictable event.
Make sure you’re insured for the right value, namely the current total replacement cost. If your property’s value is more than your insured amount when your property is damaged, you will have to pay the difference between the insured value and the actual value.Take the following costs into account:
- Covers loss of, or damage to the structure of your home
- Includes:Cover against theft and attempted theft; malicious damage; fire or explosion; acts of nature; damaged geysers or water pipes; impact by vehicles, falling trees and aircraft
- Secures your home loan for your family should something happen to you
- Includes:A lump sum benefit should you pass away
- Insures the contents of your household
- Includes:Cover for loss of furniture, clothing, electronic equipment, rugs, curtains, mirrors, gardening tools and computer equipment