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Homeowners' Insurance
Friday, June 1, 2007
Door open to consumer choice

MortgageSA says it has launched a building insurance product as an alternative to the bank products “that have traditionally been forced upon consumers.”
Rhys Dyer, executive director of the company says the move was facilitated by recent FAIS Ombudsman rulings and the new National Credit Act that was tabled into law in June 2006. Reforms now allow the consumer the freedom of choice when it comes to houseowner’s insurance.
“Cover is compulsory as a condition of the granting of the home loan and homebuyers have historically been forced to swallow the bank’s prices if they wanted finance,” he observes.
“But homebuyers are now no longer obliged to make use of the product prescribed to them by the bank and are free to shop around for the best value.
“This should give homeowners great savings, with premiums available in the open market often significantly cheaper, and in some cases more comprehensive cover, than offered by bank insurers.”
Mr Dyer also points out that being able to offer buildings insurance makes for a sound strategic fit for MortgageSA because its business model is based on removing the hassle and paperwork for consumers and streamlining all aspects of the home financing and insuring process.
“It dovetails with our home loan, mortgage protection and household insurance offerings and takes us closer to a one stop, personal finance product and advice platform.
“We hope that like the advent of bond originators, which have to date saved homeowners millions of rands through increased competition, the introduction of free choice around buildings insurance will also result in massive savings for consumers. We estimate that the increased competition in the market will save homeowners R650 million annually in premiums.
Dyer says that while buildings insurance typically covers risks to the immovable structures of a residence and its domestic outbuildings, including all the fixtures, fittings and the improvements thereon, consumers should be aware that there is a lot of variability in what risks are covered.
For example, subsidence and landslip cover is not always included in the insurance cover unless specifically requested. The same can be said for geyser wear and tear cover.

Copyright © Insurance Times and Investments® Vol:20.5 1st June, 2007
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