Thought of the Week | Homeowner’s or Household insurance: What’s the difference?

Homeowners’ insurance, also sometimes referred to as ‘building insurance’, provides cover in the event of damage to your home’s physical structure. This insurance is in respect of the bricks and mortar, roof, windows and the like of your home.  Homeowners’ insurance, as the name implies, is available to an owner of the property and would generally not be available to a tenant. Homeowners’ insurance is obtained to provide cover for the owner should the building be damaged as a result of certain types of unforeseeable events, such as fires, floods, torrential rain and malicious damage to the property, amongst others.

So why is your bondholder (usually a bank) interested in the insurance details? If a property has been bonded, it means that the bank’s security for the loan it made to the owner lies with the property and the buildings thereon. Therefore, in many instances, it is a bond requirement that the property must at all times be sufficiently insured to protect the security of the bondholder.

In sectional title schemes, it is the body corporate that is responsible to ensure that the buildings in the scheme are sufficiently insured.  Owners of units in the scheme will note that the insurance premium is included in their monthly levy contribution.

Household insurance, or contents insurance, on the other hand, covers the household goods that are not covered by homeowners’ insurance. This includes furniture, electronics, clothing and even valuables such as art and jewellery. Due to the myriad of contents in a home, household insurance usually requires that a detailed inventory and value of items to be included in the cover is provided. Certain high-value items may have to be itemised and insured separately.  Household insurance is not a legal requirement but is highly recommended to tenants and owners alike.

Contact STBB should you have any enquiries or require assistance with a legal matter.

For the best legal advice and personalised service, let's talk