PERL01-5: Personal Lines
Insurance
TOPIC 3
Topic 3: Homeowners Insurance
Introduction
Module Outcome
5. Analyse the different types of Personal Lines insurance products to advise a
client on an appropriate product.
Houseowners or Building cover
The insured or policyholder is the person (or company) named in the schedule.
The policyholder will almost always be the person that owns the private residence. If jointly owned, both
names should be shown also noted should be a bondholder.
“Dwelling” means the private residence and the following:
- Domestic outbuildings, carports and toolsheds
- Landlord’s fixtures and fittings
- Water, sewerage, gas, electricity and telephone connections
- Paths and driveways constructed of brick, concrete, pavers, asphalt or stone (not gravel)
- Walls, gates and fences (excluding hedges) Swimming pools, including fixed filtration plant
- Water-pumping machinery (but not automatic pool cleaners)
- Tennis courts
- Sauna and spa baths.
Houseowners insurance: The cover
The sum insured should be adequate including costs of demolition and professional fees. Should it be
a total loss, the policyholder may choose to have the dwelling rebuilt on the same site or different site.
Reinstatement will be as close as possible to what the house was when new but there are certain
conditions:
• The sum insured should be adequate (not market price).
• Work must be started and completed in a reasonable time.
• Within 6 months the policyholder must advise the insurer of his intention to reinstate.
• If it takes too long, the policyholder must incur some expenses but cannot be expected to pay but
can only do this in consultation with the insurer.
• If the dwelling is to be rebuilt on a different site, the cost to the insurer must not be increased as a
result of this.
Insured events
Fire including charring, smoke, lightning and explosion: The actual combustion or ignition, which is
accidental in origin and not in the place where it is intended to be. Damage caused as a direct
consequence of fire. The explosion does not have to occur on the policyholder's premises.
Malicious damage: Deliberate damage caused by thieves, such as smashing doors or cupboards to
gain entry is not covered. Malicious damages is also not covered by Sasria. No cover while the
dwelling is unoccupied, i.e., more than 30 days.
Storm, wind, hail, snow or flood: Claims following overflowing of baths or washbasins etc. is
covered. Some insurers may exclude damage to gates and fences as well as damage caused by the
movement of land if caused by storm or flood.
Earthquake and earth tremor: Determine whether it is caused by seismic activity or mining operations
and know what the insurer says whether it is covered or not which is vital in mining areas.
Insured events continued
Bursting, leaking or overflowing of water apparatus: It is common for water pipes to freeze and
even burst, in areas that experiencing sub-zero temperatures. Insurers and will normally pay for
damages done by escaping water and for the replacement of pipes. Claims for geysers are frequent,
though the bursting may be the result of wear and tear, which is not insured.
Theft or attempted theft: It is difficult to conceive that a house can be stolen, but fixtures and fittings is
easy targets for thieves.
Impact: By road vehicles, animals, falling trees, loss or damage caused by aircraft, aerial devices or
articles dropped therefrom, but excluding loss or damage caused by sonic shock waves. Some
insurers include the removal costs, but only if damage was caused to the building.
Breakage or collapse of radio or television aerials or masts, including satellite dishes: All risks
cover except for what is excluded.
Automatic Extensions
No additional premium is charged
• Breakage of glass and sanitaryware
• Rent
• Water-pumping machinery, electronic gates, garage doors, burglar alarms or automatic sprinkler
systems
• Public supply or mains connections
• Public authorities requirements
• Fire extinguishing charges
• Cost of demolition and professional fees
• Liability to the public
• Limited subsidence and landslip (full cover can be taken at an additional premium).
Specific Exclusions
• Voluntary excess as indicated in the policy schedule.
• Loss or damage caused by defective or faulty construction or design or lack of maintenance.
• When a building is unoccupied for more than 30 days, or a period as agreed by the insurer, theft,
bursting of water tank, malicious damage and accidental damage of fixed glass and sanitary ware
are excluded.
• Insured items undergoing any process of cleaning, repairing, dying, altering or restoring.
• The action of light or climatic or atmospheric conditions unless following an insured event.
• Inherent vice or defect, vermin, inspects, termites, damp, mildew, mold, fungi, wet or dry rot or
bacteria or rust.
• Theft by any tenant unless accompanied by forcible and violent entry to the buildings.
Clauses
Building operations – This limits the cover while the dwelling is being erected or structurally altered.
Depends on the insurer but they can apply an excess or delete certain covers.
Mortgagee clause - Protects the financial interest that the bondholder has in the dwelling.
Tenants - Ensures that the interests of the policyholder will not be invalidated by the acts or omissions
of a tenant, as long as the policyholder informs the insurer as soon as he becomes aware of the
tenant’s act or omission.
Security guards - Indemnity to the customer should it becomes necessary for them to hire guards to
look after his property following an insured event.