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Many South Africans are looking to purchase home insurance

But they also have questions as to what it covers, how to value their household items, and how often they should re-evaluate their policy.

Your home insurance policy depends on your household contents worth

  • The easiest way to figure out what to ensure, says Robyn Farrell of 1st for Women Insurance, is to imagine taking the roof off of your house and turning it upside down. Whatever falls out is what needs to be ensured.
  • You should review your inventory every six months to make sure things you no longer own or have gotten rid of aren’t still on your policy.
  • Keep in mind that electronic items and appliances tend to decrease in value, not increase; ensuring an item for the same amount of money as when it was purchased may be a bad decision if you can replace it for less.
  • You should also consider, depending on how old it is, whether it should be insured at all. In any case, you should always make sure that your policy covers the replacement value of your contents, not market value.

What if the content of my home insurance were undervalued?

  • If your contents are undervalued, that means there is a gap between what the amount of coverage is and what the actual replacement cost of your items is. If that happens, you will be left with a shortfall and not everything will be replaced.
  • Most people think that because they purchased a home contents insurance policy, their possessions are automatically covered in case of theft, damage or loss. But even though they paid their premiums, only part of the claim may be paid out if it only covers market value.
  • Consumers should always make sure that their coverage is for replacement value, or what it would cost to replace your items with new ones.
  • Remember that replacement cost will change over time, so some items may be worth more than they were originally.
What is the impact on my home insurance policy if I overvalued my household items?

Under South African law consumers cannot legally make a profit from insurance, says Ricardo Coetzee of Virseker insurance.

Because you can only be paid out for the true value of the loss, you will have been over-insured and paid out more money over time for no gain whatsoever.

WHAT DOES HOME INSURANCE NOT COVER
Not Fixed

The general rule is that household insurance pays for things that are not “fixed”. “Fixed” means things that are inherently part of the house like faucets, carpets, or the shower. It also does not cover any structural problems with the house.

Damage

While insurance does cover damage, it does not cover damage that is maintenance-related. If an appliance simply goes out due to failure, bad maintenance or being old, insurance will not cover it.

If a microwave is knocked off the counter by a cat, that would be covered; however, a ten-year-old microwave that simply stops running one day would not be.

“All Risks” is simply another term for Portable Possessions Insurance. It offers wider coverage for things that people generally carry around with them like jewelry and cell phones.

What does All Risks mean?