Article provided by King Price Insurance
So… The bank has approved your business proposal, funding is coming your way, your dreams are within reach… But first you need an HQ for your SME. Buying a building is one of the most rewarding investments you can make in your life-time but it can also be scary. It means you’re suddenly responsible for an asset that’s worth millions of Rands.
When finalising your bond application, the bank’s loan officer will tell you that you can get buildings insurance as part of the package. Sounds like a sweet deal on paper, right? Why shop around for batteries when they’re included in the flashlight?
All banks will insist that you have buildings insurance as a condition of your bond. But, before you sign on their dotted line, consider this:
- The bank only has to cover itself against potential losses on the monies advanced on the loan, so you may want a second opinion on the value of your buildings insurance cover.
- Shopping around for buildings insurance could pay off as you may find a better policy elsewhere.
There are business owners who prefer their bank as a one-stop shop for their insurance and bond needs. This is because they have established a relationship of trust with their current provider and may not feel comfortable with other banks handling their financial affairs.
But, bankers can also make you feel like you’re back on the playground facing the school bully, and use scare tactics to pressure you into buying products. When it’s time to sign for the bond, many people assume that if they don’t accept the bank’s insurance offer, they may be penalised.
In reality, the Short-Term Insurance Act No. 53 of 1998 requires banks to inform loan applicants that they have the freedom to choose their own insurer. Banks must also get written confirmation from clients that they were notified of this freedom of choice.
When choosing your insurance provider, there are several factors that you should take note of. Compare the best policies from trusted insurers, and make sure that you know what you’re signing for.
Just as you would use a home loan repayment calculator to estimate the monthly repayments, shopping around will help you find the best policy for your buildings insurance needs.