Unseen risks: Check what your home insurance policy actually covers

How familiar are you with exactly what your property insurance policy covers?

Home owners face unseen risks, especially as climate change unfolds, warns Christelle Colman.

The CEO of Ami Underwriting Managers uses the example of US country star Kid Rock, who recently hit the news because his beachfront house in Florida is at risk due to severe erosion.

She says this celebrity case sheds light on a broader issue facing home owners in South Africa as well, where 'gradual operating causes' are being excluded from coverage.

"These exclusions often include damage from rust, rot, mould, and gradual deterioration, which, though slow, can lead to catastrophic outcomes if left unchecked."

Colman explains that while insurance policies generally cover you for sudden and unforeseen events, both erosion and corrosion are risks or events that happen over a period of time.

"The article made me think of how many of these similar situations we face in South Africa, for instance on the KZN coast and on the Breede River in the Western Cape, where people are exposed to continuous problems. They think they can claim for it, but actually your insurance policy will not cover what's termed a 'gradual operating cause'."

"Your policy covers you for sudden and unforeseen events, so whether it's weather-related or crime-related... Something that happens over a period of time is where the problem is."

Christelle Colman, CEO - Ami Underwriting Managers

This is not simply an insurance issue, Colman says.

It can also impact the value of an affected property if companies are not prepared to insure.

She references the example of home owners on the Breede River who're already experiencing this, with a likely knock-on effect on the future resale value of those properties.

Colman also urges prospective buyers of waterfront properties to do their homework.

"Make sure it's not exposed. Ask the home owner if they've had incidents or if insurance companies have declined claims in the past, because that would be a red flag right there."

Christelle Colman, CEO - Ami Underwriting Managers