16/02/2022
What is underinsurance?
Underinsurance: This may sound obvious, but, except for motor insurance, the value of the goods insured should equal what it would cost to replace them today, not the original purchase price.
Very often, we find that goods remain insured for their original value – for example, a leather couch bought 10 years ago would be insured for R6 000. But to replace the couch might be R20 000 today. For this reason, insurance companies usually automatically adjust your sum insured each year so that the covered amount keeps pace with inflation. This should be made clear in your policy document, but the adjustment done by the insurer may not be sufficient and you may have to increase it further.
