Don’t Run The Risk Of Being Underinsured?

Are you currently underinsured? “I don’t know and why does it even matter?” could be your retort. The fact of the matter is that it’s probably not something that keeps you up at night until the day you suffer a break in, at your house, and your insurer kicks up a fuss about paying 100% of your claim. It’s at this point that you are going to be kicking yourself for not placing enough emphasis on the issue. But unfortunately, at this point, it’s far too late.

Let’s paint a quick picture: You are away for the weekend and when you get home on Sunday night you find that your place has been broken into and most of your stuff has been swiped. You are covered, right? So nothing to worry about, these types of things happen, you will just get onto your insurance company first thing in the morning.

08H00 rolls around the next morning and you are on the phone to your insurer. Claim is lodged and the next step involves the insurer sending out a claims assessor to finalize the claim.

The next day the assessor is at your place and having finalized his report, let’s the insurer know that he believes your loss is R750 000.

R750 000?

But hold on a second, how much are you insured for in your policy schedule? You scratch around to find the document and the number attached to your household contents sum assured is R375 000. This, however, was the value of your household contents 5 years ago, when you took out your policy.

Now you are starting to sweat a bit...

The value stated in your policy schedule is exactly 50% of what the assessor has determined the loss is. Is your insurer going to pay out the R750 000? No way Jose.

But, is your insurer even going to pay out the R375 000?

What now?

Well, the “now” is that you are underinsured and your insurer is going to apply “average”. Because you are 50% underinsured, your insurer is only obliged to pay 50% of your claim.
  • No R750 000 pay out
  • No R375 000 pay out
  • Only a R187 500 pay out
Don’t be one of thousands of South African’s who underinsure their household contents only to learn the toughest lesson when it comes time to claim. Rather, complete an inventory of your household content (each year), determine an accurate value, make sure you insure your possessions/content for the right value and sleep easy at night.

The iHound Team