Short-term insurance policy holders in South Africa are under-insured by about 45% on average, according to market research conducted by Santam, South Africa’s largest short-term insurance company.
Commenting on the data on Tuesday, Santam CEO Steffen Gilbert said this means in terms of the insurance contract, a policy-holder will only receive partial compensation after submitting an insurance claim.
“Let’s assume that the replacement value of a person’s house contents is R200 000, but the sum insured is just R110 000 rand and during a burglary R20 000-worth of goods are stolen. Because he is under-insured by 45%, only 55% percent of the loss or R11 000 will be paid out.
“No one wants to come up with cash when they are experiencing a traumatic time. Under-insurance can put people under severe financial strain,” Gilbert added.
He noted that most people fall into the trap of under-insurance because they are unaware of the main pitfalls.
“Not insuring your assets at the correct replacement value is one of the main mistakes people make. The sofa that you bought five years ago for R1 500 might now cost R3 000 to replace. The contents of a house are insured at replacement value [vehicles are insured at market value].
“Therefore, you have to revise your policy at least annually to make sure that your cover remains adequate.
“Also very important is for people to remember to insure the more arbitrary things too, like curtain rods, curtains, bedding, loose carpets, books — in other words absolutely all your assets. Policy-holders should also immediately add new purchases and gifts to their policy.”
Gilbert concluded by saying that an individual can either draw up an inventory or employ the services of a professional broker who will be able to assist in the valuation of house contents. — I-Net Bridge