All homeowners should apply for householders insurance!

When you want to secure a home loan to purchase a new house, home insurance will be one of the loan conditions that you will need to comply to. If you don’t meet this requirement, the bank will in all likelihood decline your home loan application without further ado.

They have two reasons for being as strict as they are about home insurance:

Due to their loan exposure in your home. The bank will want a guarantee that should anything happen to your home that drastically reduces its value, there will still be a source of funds to settle the outstanding balance on your home loan.

Due to your debt exposure. Your home loan constitutes a massive debt, - one that you will remain liable for even if your home had to disappear from the face of the earth. Should anything happen, your home insurance will enable you to restore your home or, if restoration to its former state is not possible, settle what remains of your home loan debt. This affords you the ability to make a new start.

Purchasing Home Insurance

When the topic of home owner’s insurance arises during your home loan application process, the bank will no doubt offer their own home insurance product to you to consider as an option.

Making a hasty decision is not advisable. You should shop around to compare the different home insurance products offered, both from a benefits and a pricing perspective. You may also want to do research on the responsiveness of the various insurance companies where pay-outs are concerned - just to be sure.

If you choose to purchase an outside home owner’s policy, the home loan provider is likely to levy an additional monthly fee. This is a kind of service charge that normally includes the cost of annual inspections on the property (in preparation for renewal of the policy).

The bank will also request certain information to assess the adequacy of the home insurance cover you selected. These include:

An official Quotation document
The name and address of the insurance company and / or the insurance broker
Policy number
Amount of the insurance cover or the sum insured
Amount of the total premium payable
Frequency of payment of the premium
Effective dates of the policy, both for inception and for renewal
Limits of cover, detailing all the inclusions and exclusions
Special terms and conditions, if any
Excess amounts in the various categories

You will need to maintain the home insurance cover for at least the term of your home loan.

Liso Consulting is A South African Insurance Broker offering short term insurance cover. Whether you require Corporate insurance, business insurance or domestic insurance, we represent most insurance companies.

We offer the best insurance qoutes to suit your individual needs.

Contact Chantal today on 082 802 5330 or email her on This e-mail address is being protected from spam bots, you need JavaScript enabled to view it for a quote today.

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