Applying for a bond: can you choose your own buildings insurance?
Buying a home is one of the biggest financial decisions you will ever make, and your bank knows it. Before they hand over a single rand, they will insist your property is insured. What most bond applicants do not realise is that the bank cannot force you to use their in-house insurer. You have the right to shop around, compare premiums, and choose the cover that best protects your kingdom. Here is everything you need to know before you sign.
Key takeaways
- South African banks require buildings insurance as a condition of any home loan
- You are legally entitled to choose your own insurer, not the bank's preferred provider
- Your cover must be sufficient to fully replace the structure at current building costs
- King Price buildings insurance covers permanent fixtures, outbuildings, swimming pools, driveways, and more
- Switching to an independent insurer can significantly reduce your monthly costs without reducing your cover
What is buildings insurance and what does it cover?
- Buildings insurance
- An insurance policy that covers the physical structure of a property, including the main dwelling, outbuildings, garages, and permanent fixtures, against damage caused by events such as fire, flood, storm, and subsidence. It does not cover the contents inside the home.
Buildings insurance covers the physical structure of your property, not what is inside it. That means the walls, roof, floors, and every permanent fixture attached to the building are protected if something goes wrong. Most policies also extend to outbuildings, garages, and other structures on the same erf.
At King Price, buildings insurance covers all of the following permanent structures and fixtures:
- Fittings and improvements
- Driveways
- Patios
- Fences and boundary walls
- Swimming pools and spa pumps
- Outbuildings and garages
- Loose gravel paths
- Pool cleaning equipment
Whether it is your primary residence, a holiday home, or a rental property, buildings insurance protects the asset itself. If a fire, storm, or burst pipe causes structural damage, your insurer covers the cost of repair or rebuilding.
Why do banks require buildings insurance for a bond?
When a bank grants you a home loan, the property serves as security for the debt. If the building burns down or is destroyed by a flood and there is no insurance in place, the bank’s security disappears while you still owe them the full loan amount. Buildings insurance protects both parties: you keep your home, and the bank keeps its collateral.
This is why every major South African bank, including ABSA, Standard Bank, Nedbank, and FNB, lists valid buildings insurance as a non-negotiable condition of bond approval. Without it, your loan will not be registered.
Can the bank force you to use their insurance?
No. This is the most important thing to understand when applying for a bond. South African banks are not permitted to make their in-house or preferred insurance product a condition of granting the loan. The National Credit Act and guidance from the Financial Sector Conduct Authority both protect your right to source buildings insurance independently.
A credit provider may not require a consumer to purchase any particular insurance product as a condition of a credit agreement, provided the consumer obtains equivalent cover from a registered insurer.
In practice, the bank will ask you to provide proof of cover before registration. As long as your policy meets their minimum requirements, any registered insurer’s policy is acceptable. Banks may try to make their own product sound like the only option. It is not.
Many bond applicants assume they must use the bank's insurer. They don't. Shopping around for buildings insurance is not only your right, it is one of the easiest ways to reduce your monthly bond costs from day one.
What cover amount does the bank require?
Banks do not insure your property for its market value. They require cover equal to the full replacement value of the structure, which is the cost of demolishing the existing building and rebuilding it from scratch using current building materials and labour rates.
- Replacement value
- The cost of rebuilding a structure from the ground up using current materials and labour, after clearing the site of debris. Replacement value is typically lower than market value in established areas but can exceed market value in remote locations.
You will never be permitted to insure the property for less than this figure. Underinsuring your building is not just a bank compliance issue. It is a financial risk to you. If your home is insured for R1,500,000 but it costs R2,200,000 to rebuild, you will personally absorb the R700,000 shortfall.
To calculate the correct replacement value, use the Building Cost Information Service of South Africa (BCIS) calculator or ask a registered quantity surveyor. King Price can also guide you through this when you request a quote.
Buildings insurance vs home contents insurance: what is the difference?
| Feature | Buildings insurance | Home contents insurance |
|---|---|---|
| What it covers | Physical structure, fixtures, outbuildings | Furniture, appliances, clothing, valuables |
| Required for a bond | Yes | No |
| Covers storm damage to roof | Yes | No |
| Covers stolen TV | No | Yes |
| Covers burst geyser damage to ceiling | Yes (ceiling) | Yes (contents damaged by water) |
| Covers swimming pool | Yes | No |
| Who needs it | All property owners | All homeowners and renters |
Many South Africans confuse buildings and contents insurance. Your bond only requires buildings cover, but most financial advisers recommend holding both policies simultaneously. King Price offers both, and bundling them can simplify your claims process significantly.
How to get buildings insurance for your bond application
Why choose King Price for your buildings insurance?
King Price has been disrupting the South African short-term insurance market since 2012. The kingdom was built on one idea: insurance should be fair, transparent, and affordable. Buildings insurance from King Price gives you comprehensive structural cover without the royal ransom.
King Price buildings insurance client retention 2024
King Price buildings insurance clients renew their policies at a rate 18% higher than the South African industry average, citing competitive premiums and straightforward claims as the primary reasons.
Here is what sets King Price buildings insurance apart:
- Cover for all permanent fixtures, outbuildings, pools, and driveways
- Competitive premiums with no hidden fees
- A straightforward claims process via the King Price app or phone
- Dedicated client service team who actually answers the phone
- Flexibility to adjust your sum insured as building costs change
Frequently asked questions
Update history (1)
- Full rewrite. Added NCA citation, replacement value guidance, sectional title FAQ, and TL;DR Pro block structure. Original article published circa 2015.
Protect your kingdom today
Your home is your castle. Make sure it is protected like one. Get a buildings insurance quote from King Price in under 10 minutes and give your bank exactly what they need, at a premium that keeps more gold in your treasury. Get your buildings insurance quote now.
