13/01/2021
Tip of the Day:
January is always the best time to review your sum insured under your Householders Contents section of your policy. The reason for this is the Festive season / Christmas and you have spent money on gifts that you will need insured. Please note that all sections of your policy except motor is insured at replacement value. This means that if your TV was bought 10 years ago at R 5 000 it could mean that the model has been replaced and the replacement cost will be R 7 000. This means you will have to increase your contents section accordingly.
When reviewing your contents cover you need to take the following important points into consideration:
1. Rand / Dollar exchange fluctuation - Reason for this is most items are imported and are linked to the Rand / Dollar exchange rate.
2. You need to make sure that you take everything into consideration. Contents is when you take your house and turn it upside down what ever falls out needs to be insured under contents ( Except items that must be specified like, Computers, laptops, jewellery, ETC. This means furniture, clothing ( incl. underwear, shoes, cutlery, crockery, pots, ETC )
3. Look at items that need to be specified that you have just received as a gift or bought for your family like: Cellphones, Laptops, Jewellery, watches, IPODS, ETC. When specified under Personal all risk it means that these items can leave the walls of your house and will still enjoy cover. Laptops will need to be insured under the Personal computer section which will then extend to be covered outside your house.
When reviewing your contents insurance I find it best to use a inventory form as it shows you per room in your house and helps you keep your bearings as to what is in each room. Things like TV's in general do not alter much in terms of replacement value BUT fridges, dishwashers, washing machines, leather lounge suites, bedroom suites these all climb drastically when the exchange rate is unpredictable.
The down side of not increasing / reviewing your contents section is that the average clause applies at claims stage. This is when the insurer does a quantum valuation at claims stage to ensure that you are correctly insured. If they find you are under insured the average clause is applied. They will work the average application out as per the below formula:
Value on Risk ( Sum Insured ) divided by Value at Risk ( Actual value of contents ) multiplied by claim value and they will then get the percentage / value that they will pay out before any applicable deductible.
Lets take a scenario that a burglary happened and the client was insured as follows:
Contents Insured: R 500 000
Contents Value: R 600 000
Claim Value: R 50 000
R 500 000 / R 600 000 X R 50 000 = R 41 666.67 to be settled before applicable deductible is applied. This means that the insured is self insured for R 8 333.33 ( 16.67% under insured / Self insured )
If you need any assistance at getting a competitive quote please do not hesitate to contact us via [email protected] or Tel: 011 975 9001 or Cell 072 323 4509
