Homeowners warned on threats to homes

When disaster strikes your home, are you prepared? The prevalence of natural disasters around the world recently might have focused your thoughts on your home insurance. Are all threats to a home - from the routine to the downright freaky - covered in the average homeowner's insurance policy? We've polled some of SA's biggest insurance companies to find out about the most common and most unusual home threats.

Melody Redman, general manager of Budget Insurance Brokers, said the eight biggest threats to a home are:

• Break-in or theft;
  
• Burst or overflowing geysers;
  
• Burst or overflowing pipes;
  
• Fire;
  
• Storms;
  
• Lightning;
  
• Falling trees; and:
  
• Earthquakes or tremors

Bradley du Chenne, spokesman for Dial Direct Insurance, said all of these threats were routinely covered in its homeowners' or buildings' insurance policies.

The unexpected

"More unexpected threats include food that deteriorates because of a power failure or if your fridge or freezer breaks down; loss of personal documents, coins and/or a stamp collection; a hole-in-one or a bowling full-house on a recognised golf course or bowling green; and veterinary expenses if your pet is injured in a road accident."

While you may think most home threats are automatically taken care of, insurance companies say policyholders need to go through their contracts to avoid nasty surprises.

When it comes to earthquakes, Trevor Devitt, spokesman for OUTsurance, said: "Although subsidence is not in the 'most common' category, the damage caused can be very severe ... Acts of nature can rank highly in terms of severity as well."

Devitt said some insurance policies offered optional cover for subsidence. "It is not always automatically included."

Homeowners should be aware that defective construction, wear and tear and maintenance were not covered.

"Other perils that are not covered include, for example, any damage if the relevant local authority did not approve or would not have approved the construction of the building. Borehole and swimming pool equipment is also not covered (in the average homeowner's policy)," Du Chenne said.

Don't under-insure

Redman said the biggest mistake was to under-insure. "The amount for which you insure your belongings must be their replacement value. The replacement value is what it will cost you, at the time of a claim, to replace all your belongings with similar new ones."

Devitt said: "Some consumers misunderstand the property valuation, for insurance, and selling purposes. The latter is a factor of supply and demand and fluctuates with market forces. The insurance valuation is the cost of rebuilding the property on a like-for-like basis and is not influenced at all by the market fluctuations."

Redman said another common misconception came when buying a property. "A bank will often put great pressure on the homeowner to insure through its associated insurance company, but the truth is that it does not matter which insurance company you use, as long as you insure your home. This leaves you free to shop around for the best deal," she said.

Du Chenne said that, because of the recession, policyholders were tending to shop around more. "Price is king," he said, and "service excellence is what separates the men from the boys ..."

For once, not passing the buck

Devitt said: "Claims patterns are more fundamentally influenced by weather patterns than financial need. Dry weather leads to fewer claims, while wet weather means more claims. The instance of people cancelling cover is less prevalent in our market because most properties are bonded and insurance is a requirement of the bond so there are checks and balances in place between us and the banks to prevent unwarranted cancellations."

Some household claims are bizarre, said Angelo Haggiyannes, director of Auto & General Insurance. "Insurance and humour do not usually go hand in hand but, having spent 22 years in the short-term insurance industry, I've come across some pretty out-of-the-ordinary claim explanations. My all-time strangest claim ... had to do with a policyholder's vehicle: a client collided with a buck. When asked if he hit the buck, he replied: 'I don't know if I hit the buck or if the buck hit me - we were both running.'"

Devitt said one of his customers had tried to claim after the birth of three children. The client told the insurance company he needed to increase the size of the house and wanted to claim for the addition of three bedrooms.

Don't even think of trying these on

Trawling the Internet reveals a long list of wacky believe-it-or-not insurance claims. If you're looking for ways to fleece your insurers, avoid the following claims:

• You accidentally shot your television while cleaning your gun.
  
• A magpie flew into your house and stole your glasses.
  
• Your sex toys were stolen.
  
• You need a new watch because constantly being late makes you speed in your car.
  
• You thought your car window was rolled down, but it was obviously up because you put your hand right through it.
  
• A potato rolled out of your shopping bag and got stuck under the brake pedal.
  
• A frozen squirrel fell out of a tree and smashed through your windscreen, landing on the passenger seat.

Source: Sunday Times