Are You Making This Mistake When It Comes To Contents Insurance?

Do yourself a favour…pull out a copy of your most recent motor and household insurance schedule and page to the section which deals with household contents.

Then look for the sum insured amount. Got it?
Now here’s what I’d like to share with you…apparently 84% of all policyholders are under-insured on their householders insurance!
Here’s what you need to ask yourself:

“Are you one of the 16% who are correctly insured?”

Of course the only way to find out is by completing an asset register at replacement value, and if you feel that you are indeed correctly insured then read no further, BUT…

Wouldn’t you be interested in finding out by how much the 84% are under-insured?

What if I were to tell you that approximately 64% of these households are under-insured?
“So who cares?” you might be saying at this point, and yes I know…insurance isn’t the most exciting thing in the world, but let’s bring this closer to home by assuming that you’re one of those who fall into the 64% under-insured group.

Take a moment to study the sum insured on your insurance schedule.
How much are we talking about…R200, 000, R500, 000…a R1, 000, 000?

Now let’s assume you go on holiday only to return and find your home ransacked (Don’t you love that word?). Anyways, you ring up the insurance company in a state of utter panic and lodge a claim for R150, 000.

The assessor is duly sent out and – after studying your upmarket home, after writing down a detailed description of all the possessions you’ve taken twenty years to build up – submits a report to the insurer saying that he feels you’re 60% under-insured!

“So what?”… I hear you splutter, “I’m insured for R200, 000 and I’m only claiming R150, 000. What’s the big deal…surely they’ll pay?”

Unfortunately the insurer sees it differently. In their opinion you should have been insured for closer to R500, 000 which means you’re self insured for 60% of the loss!
You weren’t willing to pick up the tab for the full amount at risk so why should they be willing to pick up the tab for the full loss?

It’s called ‘average’ and YES, the insurer has every right to apply it (It’s right there in the fine print of your contract).
R150, 000 less the 40% paid by the insurer means your share of the loss equals R90, 000!
Not nice…especially when the extra cover would have cost only a few bob more.

And the good news if you’re 64% under-insured?

None of the above has happened to you…yet!
But consider for a moment all the money you’ve already wasted.
Let’s imagine you’re insured for R200, 000, OK? We’ve also discovered that if you ever submitted a claim for R200, 000 – and were 60% under-insured – the insurer would only pay R80, 000, right?

Now let’s apply that same principle to your monthly premium of R200.
R200 per month is what you’re paying but…cover to the value of R80 is all the insurer is willing to pay!
Basically you’re gifting R120 a month to the insurer and to make you feel even worse, multiply that R120 by the number of years you’ve faithfully been paying premiums.
Not hard to understand why people who faithfully pay their premiums year in and year out get so upset – eina!*

But there is in fact two ways out for you…

Method 1:
Run a complete inventory of your household contents at replacement value. The easy (and cheap) way is for you to download an inventory sheet from our site (either the Santam or CIB version is fine) and ask your broker to adjust your insured values. The problem with this method is that no-one ever does it!

Method 2:
Employ the services of a professional valuation company to come and do it all for you!
The great thing about using a professional valuation company is that most of the insurance companies will accept their valuation figures at the time of claim. Once a year, for a small fee, the valuators will visit you and update your inventory.

If you’re interested in seeing a sample valuation please click here.
If you’re interested in having a professional valuation done at your home why not contact us for more information.
If you’re interested in placing your motor and household insurance with a broker who’s prepared to help with an evaluation of your household contents every year then why not let us know.

Take care of yourself

Lawrence

*‘Eina’ is an Afrikaans word commonly used as an exclamation of sudden pain.
Much the same as those who use the ‘F’ word when they stub their toe. Only difference being that ‘eina’ isn’t a profanity!

Interestingly one on-line dictionary states that it wasn’t originally an Afrikaans word but rather a word adapted from the language of the ‘Khoisan’. Which just goes to show that you’re never to old to learn something new.

Related posts:

1. Insurance Companies…Are They A Bunch Of Thieves?
2. Office Contents Insurance
3. Protect yourself against your biggest risk!
4. Should You Go Direct?
5. Short & long term insurance. What’s the difference?

Tagged as: motor and household insurance, Short Term Insurance