Homeowners might pay too much insurance - Rawson Properties
South African homeowners, especially those who took out their insurance policies on their home several years ago, should take the trouble to check whether they are not now paying monthly installments that are far too high - for the simple reason that their home is, in fact, now over-insured.
"Many insurance companies routinely add 10% per annum to the value of the property and to their clients' monthly payments," said Bill Rawson, chairman of the Rawson Property Group. "In the long run this can ensure that the property becomes seriously over-valued and over-insured. Similarly, it should now be recognised that, with builders operating in a much more competitive environment, the replacement cost of a home today may also be a great deal lower than insurance companies' formulas stipulate," he said.
"No one wants homeowners to start cutting back on vital insurance or under-insuring their homes, but we have frequently discovered that quite large sums can be saved on insurance premiums while still maintaining realistic coverage, simply by recognising the true value of the home and the true cost of replacement in today's market. These sums can then help to pay off the bond at a higher rate, a course of action which we always advocate and which has time and again proved beneficial to so many homeowners and property investors," Rawson concluded.
