A: When you buy a new home, the bank will usually insist that you obtain a home owners’ insurance policy to provide for the repair or replacement of the property in the event that it is damaged or destroyed by fire, flood, high wind, earthquake or other disasters.
Such policies often also provide insurance against less serious damage resulting from burst geysers, falling trees and collapsing garden walls.
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Most lenders will be less insistent that you take out life insurance to cover the outstanding balance of your home loan and pay it off in the event of your death.
But this cover, usually referred to as bond insurance, can make all the difference to your family at a difficult time by enabling them to stay on in a home that is fully paid off and so you should consider it very seriously. In addition, you should think about whether you just want credit life insurance for the bond or whether you should take an additional normal life insurance policy. – Gerhard Kotzé, managing director of the RealNet Estate Agency Group