Home and car insuranceYou can insure your home and car down to the last brick or brake pad.

Your home is a personal haven you enjoy with family and friends, surrounded by most of your treasured possessions. It’s where the heart is.

You can make your house more secure with things like armed response protection and alarms. Then you can add another level of protection with home insurance. After any loss, big or small, insurance will provide financial help so you can get your life back in order.

There are two options for home insurance.

The first is household contents insurance, which covers everything inside your home. That includes electronics, appliances, furniture and even the food in your freezer.

When you choose this kind of cover, the insurance company will ask you to calculate the value of stuff you want to insure. Do your homework first: write down the replacement cost of all the items in your house.

Why the replacement value and not the original price? Because a flat-screen TV similar to the one you bought five years ago will cost a lot more now.

Chances are the amount is much higher than you expected. But now you’ll have a good idea of how much insurance you need. This is important because you don’t want to buy cover for more or less than the real value of your goods.

The broker or consultant will also want to know what kind of security your house has. Burglar bars, electric fences, security gates, motion sensors and armed response contracts all count. The broker will probably give you a lower premium if you’re well protected – the amount is supposed to be in line with the risk of insuring your stuff.

You’d better keep those security items in working order, though. If you have a break-in and your alarm was off or your burglar bars were falling of the windows, your claim might be rejected.

The second option is home-owner’s insurance, which covers the structure of your home with all its fixtures and fittings. Usually, the cover is for how much it would cost to rebuild your house from the ground up to exactly how it was.

It might have added value, like payment to replace a damaged or burst geyser and even some house calls by professionals checking on faulty appliances.

This is not the lazy way to do home maintenance, though. You have to do the essentials. If your garage roof collapses and the assessor finds the support beams were rotten, your claim might be rejected. The same could happen if the reason for that leak in your ceiling is that you never cleaned your gutters and drains.

Best way to get hour home insured: be honest, be thorough, keep your end of the bargain with working security and proper care of your property.

Next to your home, your car might be the most expensive thing you’ve bought. Motor insurance is risk cover that pays an agreed amount if your car is stolen, damaged or destroyed.

Insurance companies normally use two kinds of values to work out how much the pay-out will be.

  • Retail value – how much a dealer would ask for the car with factory-fitted accessories. It’s decided by looking at retail value shown in a recognised, current motor trade publication. Other things that could affect the car’s value are its age, condition and odometer reading.
  • Agreed value – used for special classes of vehicles, like imported sports cars or vintage cars. The agreed value is how much you wish to insure the vehicle with factory-fitted fittings for.

Your premiums could be higher or lower depending on which of these values are used. The next consideration is how you use the vehicle:

  • Domestic is social or private travel and commuting to work. It includes occasional business travel but only in exceptional circumstances.
  • Business use is professional travel and work commuting on top of social, private and recreational travel.

No matter how much you love your car, its value goes down every month. You should call your insurer every year to make sure your premium is adjusted according to your vehicle’s decreasing value.

There’s more. You have to pick from three kinds of motor insurance. Their costs differ and the amount of covers differs as well.

  • Comprehensive insurance is full cover that will pay out the insured value of your car or any damage to it. It also covers you for damages to someone else’s car, or property, or for the injury or death of someone else in an accident you caused.
  • Balance of third party only pays out if your car suffers fire damage or is stolen. It also covers you for damage you have caused to someone else’s property.
  • Third-party cover only covers you for damage you have caused to someone else’s property.

As you might expect, the insurance company expects you to keep your car roadworthy. If you spin off a wet road and it turns out your tyres have less thread than an old pair of takkies, your claim might not get you anywhere. So keep your car in shape.

Insurance isn’t wasted money. Very few people can replace a house or a car out of their own pocket. If you keep it honest and play fair, cover on your home and car will be a huge boost when you’ve had a serious setback.

Talk to an Old Mutual adviser about home and car insurance, the different plans on offer and what will fit your situation and your pocket best.

If you can't afford to replace your car or home contents out of pocket, the right cover will help keep you financially afloat should the unexpected happen. A big component of that is knowing how insurance premiums work.