When it comes to protecting your home, insurance is not something you can afford to take lightly. For most South Africans, their home is their single biggest investment, and ensuring it’s covered properly can mean the difference between bouncing back after a disaster or facing a crippling financial loss.  

But there’s a crucial step that many homeowners overlook when taking out or renewing a policy: getting a professional home valuation. 

Upon first glance, it might feel like an unnecessary expense or a box-ticking exercise. After all, you know what you paid for your property, and you probably have a good idea of its value on the market. Here’s the catch – insurers don’t look at the same numbers that estate agents do. What matters to them is the replacement cost of your home, not the price you could sell it for.  

Without a home valuation, you could end up underinsured, overinsured, or stuck in a dispute when you need your cover the most. 

Market Value Vs. Replacement Cost 

This is where many homeowners go wrong. Market value is what a buyer would be willing to pay for your property, including the land that it’s built on. The replacement cost, on the other hand, is what it would take to rebuild the house itself, from foundations to roofing, at today’s building and material prices. 

One of the most common pitfalls in home insurance is failing to distinguish between these two figures. If you insure your home at its market value, you may actually end up paying too much in premiums because insurers don’t insure the land. If you go too low, you run the risk of being severely underinsured. 

The Cost Of Being Underinsured 

When we refer to being ‘underinsured,’ we are not simply talking about having too little cover. We are including something called the ‘average’ rule, which means that if your home is insured for less than its true replacement cost, your insurer will only pay out a portion of any claim, in line with the percentage you are insured for. 

Here’s an example. Let’s say your home should be insured for R2 million, but you only took out cover for R1 million. If you have to claim for R500,000 worth of damage after a fire, your insurer may only pay out 50%. In other words, you will receive R250,000 because you were only halfway insured. As for the rest of the bill? You would have to foot the rest yourself, which could mean dipping into savings or taking on new debt. 

Why A Home Valuation Matters 

A professional home valuation helps eliminate all this risk, especially when it is carried out by a qualified valuer. A legitimate valuation takes into account the size and features of your home, as well as the current costs of labour, materials, fittings, and finishes. The South African Institute of Valuers (SAIV) explains that home valuations are a critical tool for ensuring that your property is insured for the correct amount, giving both you and your insurer confidence in the figure. 

Additionally, because building costs can change quickly – especially with inflation, fluctuating exchange rates, and supply chain pressures – it’s not enough to rely on a valuation from years ago.  

Industry experts recommend reviewing your cover regularly and getting a new valuation every few years to make sure you’re still adequately protected. 

Avoiding Overinsurance 

On the flip side, a valuation can also protect you from overpaying. If you have used your market value as a guide, you may be covering the land under your house unnecessarily or paying premiums on figures that have no bearing on what it would cost to rebuild.  

This is money that could be better used elsewhere, particularly in today’s high-cost-of-living environment. 

Feeling Informed? 

A home valuation is paperwork, yes, but it also gives you peace of mind. You see, a valuation ensures that in the worst-case scenario, you are not left with a policy that only covers part of the damage. Importantly, it also makes the claims process smoother, as your insurer has a verified figure to work with rather than a disputed estimate. 

For homeowners, that certainty is worth the small upfront effort. By skipping the valuation, you might save a few rand now, but you could risk losing hundreds of thousands later. Seen in that light, it’s not just a smart step… it’s an essential one. 

We trust that this information will help you take the next step forward. If you’re looking for more practical advice, budget-friendly ideas, and planning tools, like a free Property Valuation Report, then please take a few minutes to explore AA Inform.