The 5 main types of personal lines insurance

You can get insurance for many things, but if you own a home, and have possessions in the home plus a car, these are the five main types of cover you need. Insurers often bundle three of these – home contents, all risks and personal liability – into a single package.

By Martin Hesse

1. MOTOR VEHICLE COVER

A comprehensive policy covers you for most things that can happen to your car. A cheaper form of cover, “third-party, fire and theft”, will cover damage to the other vehicle/s in an accident, but will not cover damage to your own vehicle.

The insured value is not for a new car, but is your car’s second-hand market value, which depreciates each year. If you bought the car new and it is a write-off, you may be paid out less than what you still owe on it.

2. HOME CONTENTS COVER

This covers all the moveable items in your home, but will not cover anything you take outside the home. You need to have an accurate estimate of the replacement value of everything in your home, so that you can be fully insured, and you should revise this figure once a year.

Some insurers will allow you to exclude certain items you don’t feel are worth insuring. Conditions will normally include having a certain level of home security in place.

3. ALL RISKS COVER

This is insurance for valuable items you take with you outside the home, such as a bicycle, your laptop, camera and jewellery. It usually comes in a package with your home contents policy.

Anything valued over a certain amount (say, R2 000) may be required to be listed separately and you will be charged extra on your premium. For these items, you’ll need proof of their value, such as a valuation certificate for jewellery or a store receipt.

4. BUILDING COVER

This is cover that homeowners need to have on their property. If you are in a sectional-title scheme, this cover will be the responsibility of the scheme, and any premiums will be included in your levy.

But if you own a freehold property, you need to take out this insurance yourself – in fact, banks won’t grant you a bond unless such cover is arranged. The insured value needs to cover all costs if the building is totally destroyed – for example, in a fire.

5. PERSONAL LIABILITY COVER

This is a less obvious form of insurance that is also usually bundled together with your home contents cover. It covers you for damages claimed by a third party if you are sued (but not in the case of a car accident, where any liability is covered by the Road Accident Fund).

For example, if you negligently leave your pool gate open and a toddler sustains brain damage after nearly drowning in your pool, your liability in the event of a court case will be covered.