Household Insurance

Household insurance generally refers to a form of short term insurance cover that you take out on the contents of your house. This type of insurance covers a range of contingencies, including, but not always limited to, theft, fire damage or loss, and water damage. The insurance company will commit to paying out a sum of money against such losses, in return for a monthly premium that the insured person pays. Of course the larger the size of the household contents - in other words the more items that are insured - the higher is this premium. The premium also varies dependent on the value of the goods insured. It is worth noting that most household insurance policies will only cover everyday types of household items, like appliances, furniture and clothing. Jewellery and very expensive items need to be insured separately and specifically - a priceless Faberge egg is not going to be covered by a simple household insurance policy.

Taking out a household insurance policy requires that you itemise the household items that you wish to insure. This is for the sake of clarity between you and the insurer, so that you can both know exactly what is covered by the policy. It is in your own interest to make sure that you have adequate cover for all your household items. This is also where the term "under insurance" arises. You clearly need to set a value to the contents of your house that you are insuring. After all, the point is to be able to replace the items should they be irretrievably lost or damaged. Here it is important to take note of the difference between two key concepts with regards to insurance policies - market value and replacement value.

If you insure at market value, you will only be paid out whatever the lost or damaged article is worth on the market at the time at which you claim. This could mean that you will not be able to replace your property with the same item, or an equivalent. To do so you will need to have insured it at the replacement value - in other words, what it would cost to replace the item or buy one of equivalent value. Naturally, as the replacement amount it likely to be higher, so will the monthly premiums.

All short term insurance companies tend to offer household insurance, so you have plenty of choice.

South African Household Insurance Companies