The horrors of underinsurance

© abdulsatarid – 123RF.com

There are three types of short-term insurance that are essential to have and these are covering your actual property, all of your possessions inside your home, and your vehicle, whether parked inside or outside.

Home Insurance

Bertus Visser, Chief Executive of Distribution at PSG Insure

"The structure of your property needs to be adequately insured, which should not be based on market value but rather the cost of rebuilding, which will become important in the event of unforeseen structural damage as caused by a fire, storm, or flood," says Bertus Visser, Chief Executive of Distribution at PSG Insure. "If your property needs to be rebuilt and you don't have sufficient insurance, the costs can be beyond scary."

The rebuilding value of your property has to be kept up to date, and it is your responsibility to make sure it is. If your home needs to be rebuilt after an accident, costs include demolition, land clearance, materials and labour as well as the cost of alternative accommodation for you and your family, contacting the land registry and architect fees. "This is an expensive and complicated process and being underinsured will make the experience all the more horrific," Visser adds.

Contents insurance

From your brand new television to your second hand curtains; if every item in your house were to be damaged in a fire or flood, or a few expensive items stolen, these are pricey to replace.

"It's essential to have the value of your contents regularly updated. You need to work out the replacement value of everything from your couches to your clothing in line with what it would cost you to buy these items again," says Visser. "Imagine if your house was turned upside down, everything that would fall needs to be covered." Share these updated values with your adviser or insurer, including photos or valuation certificates of specific items.

Your contents cover includes portable possessions such as your cellphones, laptops, cameras and other items that you might take with you away from home. "This all risk cover even extends to having these items with you overseas," Visser adds. "You do, however, need to supply information such as the make and model of these various items." All risk cover should be mentioned to eliminate any confusion around items that should be specified.

Your contents may change from year to year if you buy new things, as well as inflation pushing up the costs. "It may cost you an extra R1000 to replace an item in your home, so make sure your general cover amount is updated accordingly, and that you continue to pay your premiums. Failing to do this will mean if you need to claim, you may not be paid out sufficiently to replace your contents."

Car insurance

It goes without saying that having your car insured against theft is a good decision, but if you are insured to be parked in your garage, for example, you won't be covered if you leave your car outside. Keep in mind that it should also be specified if your car is parked elsewhere in the day at your work. Should your car be stolen, it will be very important that your insurer knows where your car is usually parked. "With all insurance, whatever you insure as well as the circumstances need to be accurate to ensure that in the event of a claim, it won't end up being a dead loss," Visser concludes.