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10 Home Insurance Tips you must know before getting covered!



We provide 10 home contents tips to consider before taking out a policy. Learn about security warranties made, when home contents cover is required, what replacement value is and how the law of average is applied. We also provide tips on storing invoices, and briefly discuss betterment and some all risk cover features.

Ensure that security features that you've disclosed are correct. Burglar bars and other security features are important warranties you make as it represents important elements to the risk equation of insured events.

  Insurers will note on your policy schedule with Yes or No:

  - burglar bars 
  - spanish bars 
  - security gates
  - electric fencing 
  - linked alarms
  - security guards on premises
  - perimeter wall height
  - if your property has open ground nearby
  - property within security complex 

 These must be disclosed correctly to avoid assessors rejecting your claim.

Household contents insurance is not just a requirement if you own property, it is also needed if you're renting an apartment. The bottom line is: If you own goods such as TVs, jewelery, valuables, your clothing collection - these all should be covered under a household contents policy.

The premises on which your private residence or rented apartment is situated, is written in the Schedule of Insurance. Make sure the address and postal code is correct, as this represents the 'Risk Address' from the insurers perspective.

It is a good idea to update your insurance annually. But bear the following in mind...

 - Please note that the adjustments to the sum insured do not cater for any additional items purchased or building renovations undertaken. Nonetheless, your property needs to be insured for its full replacement value.

What is replacement value?

Replacement value is the value it will cost you, at the time of your claim, to replace your insured belongings with similar new ones.

When making a claim, the insurance company will calculate the replacement value based on the amount for which you should have insured your belongings.

If your belongings are insured for less than that amount, then the insurance company will only pay a part of your claim. The following represents the law of averaging method. The under-insurance calculation is:

Insured amount / Replacement value X Claim amount

Example:

Description Amount
Claim amount R100,000
Insured amount R500,000
Replacement value (actual) R1,000,000
Under-insurance calculation = (R500,000 / R1,000,000) x R100,000
  = 0.5 x R100,000
Claim payment = R50,000
Under-insurance (not covered) R50,000!

Please take note It is important to check on your policy schedule the Household Contents Sum Insured value.

Automatic Inflation Margin - Insurers will increase your sum insured automatically under buildings and household contents sections of your policy - that is stated on your schedule of insurance on the anniversary date of your policy by a percentage in line with inflation indices.

However, this does not relieve you of your responsibility to ensure that the Sum Insured under each section represents the full replacement value at all times.

It is important that you insure all your insured property for the correct value, which is the total current replacement cost of your insured property. Also factor in: Renovations, buying of new items, and try avoid the law of average above.


Keep invoices as records of value. Insurers insist on records to validate claims. As a force of habit, always store these invoices in a safe place for easy retrieval when needed!

         Storing invoices ensures:

    - a smoother, easier experience for you at claim time
    - it also provides proof of value where you can prove the value of a loss. 
    - if you have jewellery items, you must supply a valid valuation certificate when you claim.

Please take note Read your policy wording for sections on locked safes that you warrant are secured in your wall (not removable), and for stipulations on valuation certificates for high value jewellery e.g. above R20,000 - this may differ by insurer.

Betterment

Insurers only replace your items to the original standard. While insurers will always try to replace property 'Like for Like', this is not always possible. The material, pattern or model may no longer be available. In this instance, insurers would therefore have to replace it with a similar material, pattern, make or model.

Betterment
This is a concept whereby the role of the insurer is not to place the insured in a better off position after a claim is paid, but rather to restore your position prior to the insured event.

Be sure to read all the benefits available to you such as Emergency home assistance

    - By calling the call centre, you can find insurance approved suppliers in your area for: buildings and renovations or repairs, carpets, carpentry, gate motors, pool motors, garage door motors, thatch specialists, electrical enhancements, pool services etc depending on your insurers list.

Please take note Generally the 1st hour's labour and call-out fee is covered by your insurer.

All risk cover

    Note the following:

    - portable items should be added specifically, that is noted on your policy schedule
    - as it is portable in nature, all risk specified items should cover items on a world wide basis not just within territorial limits of SA.

If you have buildings cover you could have other cover benefits in respect of:

    - keys, locks and remote control units
    - Water pumping machinery
    - Security guards
    - loss of water
    - removal of fallen trees
    - emergency repairs

   Make sure you check your policy schedule for benefit limits.

Keep the following tip in mind when evaluating a quoted insurance premium.

   - Appropriate Premiums have been scientifically calculated to match the relevant risk. Trying to save money by paying inappropriate Premiums is not worth it in the long run as claims can and will be rejected. Rather pay the correct Premium and enjoy peace of mind.


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