Fire Mitigation Season is Here

By: Marius Neethling, manager personal lines underwriting at Santam

Five Dos and Don’ts to Ensuring Your Claim is Fully Paid

Insurance shouldn’t be a grudge purchase, it’s, in fact, an absolute necessity. This was demonstrated recently when a series of wildfires ravaged the Overberg coast in the Western Cape, and scores of people lost their homes.

Marius Neethling, manager personal lines underwriting at Santam, says, “It’s in instances like these that we truly understand and realise how essential it is to have adequate insurance cover that can help alleviate the financial burden of getting back on your feet. It’s important to do an annual check-up to see if you are correctly and adequately insured in the event of a disaster.”

Your short-term insurance contract can often seem overwhelming in its complexity, and particularly frustrating when your claims are not paid out in full. How can you ensure you don’t get ‘tripped up’ when taking out short-term cover?

Neethling explains the five common pitfalls consumers often overlook when it comes to the terms and conditions of a short-term insurance policy.

Underinsurance: To avoid this, ensure that the insured value of your contents and buildings of your private residential structures are equal to the current replacement value, not the original purchase price.  Your premiums will likely increase with a higher replacement value, but it could save you a fortune in the long run. We often find that goods stay insured for the original value – for example, a dining room set bought 10 years ago would be insured for R6 000. But to replace the dining room set could cost R20 000 today, so the claimant could be left very disappointed when they leave the shop with an inferior product to what they had.

Excess: An excess amount is the first amount payable for which the client is responsible – it is the agreed amount of money you pay as a contribution towards repairs or replacements.  An excess amount is applicable to most short-term policies, and it is explicitly stated in all policy documents. Clients are advised to read this part of the policy carefully, so they don’t get a shock when it comes to claiming.

Exclusions: With motor insurance, exclusions are one of the main pitfalls. Clients often try to claim for mechanical or electrical breakdowns, but these form part of the car’s warranty and are explicitly excluded from most short-term insurance covers. Be sure to check that your policy covers multiple drivers of your vehicle and make sure you have declared the use of your vehicle correctly for either business use or private use.

All-risk insurance: This refers to items that are mobile, such as jewellery, cameras, laptops, phones or tablets. These are generally insured under your household content policy only when they are at your home address if not specifically insured. High value items that can be removed from the risk address can be specified and do not form part of the total value of the house contents, you need to supplement the cover with an all-risk addition to your policy. You should supply original purchase invoices or valuation certificates if applicable, to your insurance company, and preferably keep a copy as proof of ownership.

Due to the current economic climate or circumstances we are experiencing it is therefore vital to evaluate the priority of specifying these items by looking at the following aspects:

  • Monitory value
  • Emotional connection with the item (whilst not ensuring the sentiment the item still has a monetary value)
  • Risk exposure (Nature (High/ low risk of item being lost or damaged)

Personal liability: This refers to insurance against a third party suing you in your personal capacity, for financial loss, physical injury or death. The most common form relates to your householder’s insurance, covering the structure of your home and its permanent fittings, and typically includes medical costs, restoring or replacing damaged property, pain and suffering to the injured party, loss of income, legal costs and expenses. Standard cover for personal liability is between R2m and R5m, but this may not be enough to save you from financial ruin if someone does claim against you. Most insurers, therefore, offer top-up cover at a low additional premium – extending your cover to R10m or even R20m as in the case of Santam. As the chances of you claiming are very low, extended cover is highly affordable and probably well worth it.

One of the best general tips we can offer clients is to work with an expert when structuring short-term-insurance policies. The group’s intermediaries – or short-term insurance brokers – qualify via a series of regulatory exams and they really understand both the needs of the client and the structure and terminology of the insurance provider.

“Alternatively, the clients could contact and interact with the insurer directly. As a result, policies are set up in such a way as to avoid these common pitfalls and ensure that the client are adequately/sufficiently/correctly insured and claims are paid out when it comes to claim time,” Concludes Marius Neethling.