Flip your house to find out if you are underinsured

Under-insurnace

All the items that would fall out if you had to turn your house upside down, are the items that have to be covered in your household contents insurance policy 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 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. Here is an example of how you could be underinsured:

Under-insurance

Ways to save without cancelling your vehicle insurance

Ways to save without cancelling your vehicle insurance

Because of the Janu”worry” aftermath, you might be tempted to cut costs to make up for your recent overspending. One cost item that stands out in particular for many, are monthly vehicle insurance premiums – as this expense may seem high to maintain. As a result, consumers end up thinking that they will save more money by cancelling their vehicle insurance policy.

However, it is not a smart choice, especially in the long run. Eugene Herbert, managing director of an advanced driver training company, MasterDrive, says “Even a relatively minor incident that puts your car out of commission can be devastating. You may be left trying to pay a bill that reaches into the thousands” says Herbert.

In addition, you would have to pay for the other vehicle’s damage if you caused the accident not to mention the loss you will suffer if your vehicle is stolen. According to a report released last year by the Automobile Association of South Africa (AA), 70% of vehicles on South African roads are uninsured. In addition, there were 16 325 reported carjacking cases from 2017 to 2018, while the festive season death toll on SA roads was 767 at the end of 2018.

As such, one can simply not afford to cancel vehicle insurance as well as life insurance. Life insurance is essential as it ensures that your loved ones are taken care of should you no longer be there. Here are the few ways to save without cancelling your vehicle insurance, cutting on your insurance premiums and without having to cancel your policy:

  • Speak to an insurance broker such as Iemas Insurance Broker (FSP 47563) a wholly owned subsidiary of Iemas Financial Services, about your insurance requirements. A broker will provide you with competitive quotes to choose from while taking into account your unique needs. Thus, you will get the best cover at the best price. Speak to Iemas Insurance Brokers today on 0860 102 383.
  • Review your policy every year. Contact your insurance broker to re-look your situation and your requirements – you might be able to save due to changing circumstances. For example, your car insurance premium could be less if you moved closer to work or if your vehicle is now parked in a locked garage.

Iemas Insurance Brokers defines underinsurance and highlights top tips to avoid this insurance pitfall

Iemas Insurance Brokers defines underinsurance and highlights top tips to avoid this insurance pitfall

Just because you have a short-term insurance policy, does not necessarily mean that you are adequately covered. Many people make the mistake of taking out household insurance that only covers certain household items or neglect to amend the value of their cover as the cost of replacing these items increase year on year.

“The challenge when you then claim is that your insurer might not pay out the amount you need to replace the items, as the current cost to replace it is way higher than the amount you initially specified when you took out your household contents insurance policy” says Piet Wolmarans, Managing Director of Iemas Insurance Brokers.

In addition, you might have acquired additional items since taking out household contents insurance, which would obviously not have been included when you took the cover and therefore, these items will not be covered should you have to claim now.

How do you know which items to include in your household contents insurance policy and which not to?

“Imagine you could literally turn your house upside down – all the items that will fall out (i.e. that are not attached to the structure of your house) have to be included in your policy. This includes items such as clothing, appliances and furniture to only mention a few”, says Wolmarans.

How do you make sure that you are not underinsured?

The best way to ensure that you are properly covered is to speak to your insurance broker where a qualified consultant will assist you with the following:

  1. Accurate upfront assessment of asset values with assistance from valuation professionals and documentary backup where necessary.
  2. An annual review of the sums insured on the policy schedule to ensure assets are valued at current replacement values.
  3. An annual inventory of assets to ensure that new items are added and old items are removed from the policy schedule.
  4. Clarification of any valuation grey areas.
  5. Valuation of any specialised items such as jewellery.

What about damage or loss to the items that are fixed to the structure of a house, such as a driveway, patio and swimming pool?
You can also run the risk of being underinsured when it comes to buildings cover as you might suffer loss or damage due to a natural disaster for example. As such, one should insure for rebuilding at a cost per square meter. Ensure to take into account the construction, finishing and fittings, type of roof etc., when calculating this cost as it can vary between R6 000 – R50 000 per square meter.

“Making sure that you are adequately covered is part of maintaining your individual financial wellness as you will be financially worse off in the long run should you be underinsured. Therefore, rather plan today to secure your tomorrow!” advises Wolmarans.