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:
- Accurate upfront assessment of asset values with assistance from valuation professionals and documentary backup where necessary.
- An annual review of the sums insured on the policy schedule to ensure assets are valued at current replacement values.
- An annual inventory of assets to ensure that new items are added and old items are removed from the policy schedule.
- Clarification of any valuation grey areas.
- 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.