Many of you need help with checking that you are properly insured. Please note that my advice is purely of a general nature and should be used as a guide only.
All circumstances are different and without viewing your property it is difficult to give accurate advice. Also, every insurance company has different policy wording, so it is important that you read what you sign.
In 25 years of repairing buildings for insurance companies I have yet to find a situation where an insurance company has not paid out what it should in terms of the policy you have accepted and signed.
Your property must be insured for what it would cost to rebuild, not what you could sell it for or what the municipality says it is worth in terms of your rateable value.
It is your responsibility to ensure that the amount insured is correct. Should your insurer or broker give you the amount, get it in writing and file it away safely, preferably off-site or in a fireproof safe.
If you have accepted somebody else’s figure, the onus will fall on them when things go wrong, as long as you have proof of their figures.
If you live in a new area where the developer has built a large number of similar residences, the cost of rebuilding one would be a lot higher than it cost to build 20, so the economies of scale would come into play.
It is also important to check that the revised figure you may receive from your insurer every year is based on the building industry’s escalation, as this percentage may differ from general inflation figures.
In the three weeks since I’ve been back at work in the industry I have visited at least five fires, so don’t assume it will never happen to you.
So how much should you be insured for when it comes to your main building?
First, calculate the area of your house, that is length x width. If your property is irregularly shaped, take the two longest dimensions. This might give you slightly more area than you actually have but you will be erring on the right side, and homeowner’s insurance is relatively cheap. If you live in a double-storey, to state the obvious, double your area.
Now you need to apply a rate per square metre, there are websites available that will give you rough values. Look at www.hilldubois.co.za/html/technical_information. html
At the moment you will build very little for under R5 000m2. Look around in the area that you are living in, and check the price of new houses. Nobody is going to be selling at a loss, so if you take that figure, less a fair value for the land, you can easily establish building costs in your area.
But be careful: working on a square metre rate can be misleading. Six rooms in a 150m2 house will cost a lot more to build than four rooms in the same area. If your ceiling height is greater than 2.4m the house will cost more, as you will have a greater volume. Unless you have really expensive kitchen cupboards, bathrooms will always be the most expensive area in your home, so if you have more bathrooms than usual, make an allowance for this. - Weekend Argus