What is the difference between Homeowners Insurance and Home Contents Insurance?
When purchasing your home, you will come across two different terms. Homeowners insurance and home contents insurance. These are two different types of insurance to cover different things. We will discuss the differences below. You should speak to your insurance provider to make sure you know what you are covered for.
Cover is normally provided for any damage to the structure of your home caused by:
Fire, lightning, explosions, storm, wind, water, hail, snow, earthquakes, aircraft; impact from animals, trees, aerials, satellite dishes or vehicles; faulty geysers; and theft (note only the damage to your house caused by violent entry).
Cover is also normally provided for:
- A broken geyser;
- Accidental glass damage; and
- Accidental damage to public supply connections caused by tree roots etc.
Note that the contents of your home and your personal possessions are not covered for damage or theft by your homeowners cover. It is your responsibility to arrange for your contents and personal possessions to be insured separately. This is Home Contents Insurance.
Costs of Homeowners Insurance
The monthly premium will be calculated according to the replacement value of your home. The amount will be reflected on your quote or be included in the levy amount with sectional title units.
The premium will normally remain fixed for a minimum period of 12 months, where after you can expect an annual increase. Increases will be influenced by the increase in the replacement value of your house and the number and value of claims made by you.
Homeowners Insurance and Sectional Title
If you are purchasing a home in a sectional title development a portion of your monthly levies go towards sectional title insurance which covers residential sections and common property for their replacement value in the event of damage or destruction.
Sectional title insurance is a legal requirement for sectional title developments. The costs are typically shared by section owners and are factored into the monthly levies.
You should request a copy of the Body Corporates insurance policy to make sure you feel comfortable with cover provided.
Homeowners Insurance Claims
If your home is damaged in any way you may submit a claim to your insurer or the body corporate. They will assess your claim and then inform you if your claim has been approved or rejected. If your claim has been approved an approved service provider will repair the damage to your home.
Once the home has been repaired to your satisfaction the insurer will pay the service provider directly. You will normally have to pay an amount towards the damage. This amount is called the Excess Payment. Check with your specific insurer what you need to do when you need to claim and what the excess amount is.
Home Contents Insurance
Home Contents Insurance covers all the items in your house that you would take with you if you were to move. You might have heard the example that when you flip your house upside down and shake it, whatever falls out is what you can insure under Home Contents Insurance.
Home Contents Insurance provides protection against theft or damage to the items in your home.
As you can see, these are two separate types of insurance, covering different things. Speak to your insurance provider to make sure you are comfortable with the cover provided.