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Home Owners Insurance: making sure what is covered and what isn’t…

Written by  Martin Oosthuizen
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Home Owners Insurance:  making sure what is covered and what isn’t… Home Owners Insurance: making sure what is covered and what isn’t…

Having bought his dream home, Harry felt sure that his investment was secured against all unforeseen mishaps.  After all, he had taken out home owners insurance with one of the leading insurance companies, according to the conditions of his bond approval.  He could now happily begin paying the bond instalments.

Everything went well for a year or two, until Harry decided it was time to extend the home by adding another bedroom.  He had the plans drawn up by a friend of his, a respected local architect, but great (and unpleasant) was his surprise when he tried to lodge his plans at the municipality.  Here they told him that some of the existing improvements on his property were in fact illegal.  Upon further enquiry, it was determined that the previous owner had constructed the indoor braai area without approved plans.  As a result, the municipality refused to approve his new plans and, to his horror, he discovered that his home owner’s insurance policy specifically excludes any structures not approved by the local authority AT THE TIME OF CONSTRUCTION.  That meant that, even if he obtained the municipality’s approval afterwards, the indoor braai area would not be covered by the policy.  When Harry complained that the municipality had given a rates clearance on the property before it was transferred into his name, the municipal official just shrugged.

Harry’s only recourse now was to approach the previous owner, who may or may not defend any action against him and who may or may not have sufficient funds, should Harry suffer any damages pertaining to the braai room.  What happens if there is a leak and the rest of the house is flooded?  Who will pay if the walls collapse and damage occurs to the rest of the house?  Worse still, is that Harry would be obliged to disclose this information to a prospective purchaser, should he decide to sell the house.

The best solution to this kind of problem is, unfortunately, no longer available to Harry, namely “prevention is better than cure”.

So, when buying a home, make sure that the entire construction has approved building plans and know what:
•    is included and excluded in your home owners insurance policy; and
•    what your obligations are.

Martin Oosthuizen

Martin Oosthuizen

Martin Oosthuizen (BA LLB, University of Stellenbosch) was admitted as an attorney by the High Court of South Africa (Cape Provincial Division) in 1993. Martin is the director at Oosthuizen & Co in Paarl and Stellenbosch.

He concentrates on Property Law, Trusts, Estate Planning and Risk Management.