As a homeowner, you need two types of insurance to protect yourself against the unexpected. Homeowner's insurance covers the structure of your property, while household insurance covers the contents "your possessions".

If you own a home, you need both Home Owner's insurance and Household insurance.

Home Owners Insurance - relates to the structure of your property, and covers you for Fire, Water Damaged and other unexpected happenings.

When you get a home loan from a bank, it will insist that you take out homeowner's insurance. The bank needs to make sure that it can recover its loan should the property be damaged or destroyed. So shop around before your home loan is approved, otherwise the bank will insist on using their agents, which can cost you more at the end of the day.

If you own a home/flat or apartment in a sectional title property, you are usually covered for homeowner's insurance, and the premiums are included in your monthly levy.

Household Insurance - covers the contents of your home against loss arising from events outlined in your policy document. Contents also covers things in your garage/storeroom as well as garden furniture and other items outdoors, although there may be conditions.

You cannot take out household insurance to cover only specific items, such as your television, video recorder and sound system. Virtually all household insurance is provided on the basis of "new for old". In other words, the insurance company pays out what it would cost you to replace the insured item at current prices rather than what it originally cost you to buy it. You must therefore keep an eye on the current replacement cost of your possessions.

When you take out household insurance, you place a value on your household contents by insuring them for a particular sum. This sum, less any excesses which you may have to pay, is the maximum that your insurance company must pay you if everything is lost, stolen or damaged.

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About the author:

Dale Maxwell - http://www.insurance-south-africa.co.za - http://www.dialdirect-quote.co.za