Lize Badenhorst | What you need to know about underinsurance
It’s easy to assume that everything in your home is adequately insured until you realise, when you need to claim, that you did not include all your belongings in your home on your insurance policy. All the items that would fall out if you turned your house upside down, are the items that must be covered on your household contents insurance policy and at the current replacement value.
Thus, if you only include certain items in your policy, neglect to update the value of the items in your policy to reflect their current replacement value, or forget to add new items you purchased since taking out the policy, then your insurer might not pay out the amount you need to replace all your items in the event of damage and loss.
The consequences of you being underinsured, may mean that you would have to pay for the uninsured items yourself, which will result in you suffering a financial loss. You can avoid the trap of being underinsured by calculating how much you are currently insured for.
Assessing your policy on a regular basis protects you from being surprised when you want to claim – knowledge is power.
The loss or damage of your personal belongings due to events like fire, theft and natural disasters, are all unexpected events which should be expected – as we do not know what the future holds.
The important questions you should ask yourself are:
- Do I have enough insurance to replace all my belongings at the current replacement value?
- Do I have enough insurance for construction costs to rebuild my home?
If you answer yes to both these questions, then your chances of being underinsured are very low. If you answered no, well then this might be the right time to schedule a meeting with your insurance broker.
*Lize Badenhorst is iMas Insurance Brokers GM: Short Term Insurance.
Insurance Biz proudly displays the "FAIR" stamp of the Press Council of South Africa, indicating our commitment to adhere to the Code of Ethics for Print and online media which prescribes that our reportage is truthful, accurate and fair. Should you wish to lodge a complaint about our news coverage, please lodge a complaint on the Press Council's website, www.presscouncil.org.za or email the complaint to enquiries@ombudsman.org.za. Contact the Press Council on 011 4843612.
Leave a Comment