Introduction:
In my 17+ years of experience in dealing with claims and determining whether property is correctly insured, I have experienced the “bad” situations when average is applied to a claim due to being underinsured.
No one ends up happy and someone always looks for someone else to blame, which creates a bad environment for the property owner, the broker, and insurance company – just an overall bad experience. It also creates a bad reputation in the industry resulting in the loss of faith for insurance overall.
This is usually caused due to selecting a value for insuring your property at a lower than replacement cost – the best person to supply this value for insurance, is you! Because you live in your home, enjoy its comforts in contents, and you purchased it all – not your broker or insurer.
There are many types of insurance policies available i.e. Personal Policies, Business/Commercial Policies, Hospitality Policies, Agricultural Policies, Engineering Policies, etc. and also many different Insurance Companies.
The intention of Insurance Companies, to provide cover for the sudden and unforeseen loss of physical/tangible property and/or financial interests, are all the same from the different insurers.
However, from the multiple policies from respective insurers available, there is a suitable policy that fit your specific lifestyle and/or need for insuring your property.
This is where a broker is key to provide you with professional advice on selecting the precise policy for you.
But here, we focus on a Personal Policy during this exercise, for Building, Contents, All Risk, and Hobbies insurance only.
The definition of “property”:
Firstly, one needs to understand that the term “property” refers to your contents, buildings, and other tangible “assets” you chose to insure.
Why should I make sure my property is insured correctly:
Insuring your property to the correct value is crucial in terms of Short-Term Insurance.
At the time of a loss by an insurable peril, its value at risk is “tested” whether it is adequately insured at the time of the loss/damage.
Should the selected sum insured not be adequately insured, your policy will apply the Condition of Average.
Definition of the Condition of Average:
In Lay Mans terms, the explanation of “average”, is a concept used by all insurers to deal with underinsurance.
If a policyholder is under-insured, he will not be paid in full when a loss occurs to property insured o fteh policy holder. The amount of any loss will be proportionately divided between the insurer and the insured, based on the full value of the property.
As an example, should it be determined that your property should have been insured for R80 000, but the actual replacement value is R100 000, you are technically insured for only 80% of the replacement value. The insurer is therefore obliged to only cover the value chosen to insure value of R80 000 – remember, your premium paid is based on this chosen amount.
Remember, contents and building insurance is based on “replacement value” – the current replacement cost at the place where the loss occurred – not what you paid for it, or what you can get for it on the market, and does not include land (when it comes to building cover).
How to determine your value at risk – correct replacement value to insure:
I will provide you with the necessary tools to determine the cost to insure your property.
Using these tools, you can calculate the value at risk for your property at your leisure, without having a stranger walking through your home and going through your personal belongings or walking through your house to determine the class of building to use in establishing the replacement cost thereof.
By applying these prepared information and sheets to calculate the value at risk for buildings and/or contents, you will be able to provide your broker or insurer with an estimate insurable value of your property.
The documentation will also provide you with a record of such a calculation for future reference at the time of a claim, or review at the time of renewal of your policy.
The documentation will also assist you to adjust any changes in your lifestyle, whether you renovate your home or build any additions, and/or purchase new contents for your home.
Constant/regular review of your value at risk ensure that you are always adequately insured and avoid any possible underinsurance.
How do you get the tools to perform a self-assessment:
Only 5-steps is applicable:
- Choose whether you require to assess the value at risk for your Contents or Buildings – or both
- Send an e-mail to admin@pdkservices.co.za with your Name, Address, Contact number, and your choice of assessment (as in Step 1)
- An invoice will be supplied to you for the requested type of assessment
- You will provide me with proof of payment for the chosen service as per the invoice
- Once the payment is received, the all the tools will be provided via e-mail to perform the self-assessment for the purpose to determine the value at risk for your property.
Furthermore, should you require any further assistance, I am just a phone call, Whatsapp message, or e-mail away.
Costs in providing the tools required:
| Option 1 | Contents Assessment Documents | R500.00 |
| Option 2 | Building Assessment Documents | R500.00 |
| Option 3 | Contents & Building Assessment Documents | R900.00 |
In conclusion:
Remember to always make sure you are supplied with a copy of your insurance schedule, showing what you have selected for cover, and to what value.
Furthermore, it is a requirement that you also be supplied with a policy wording, in relation with the policy cover provided.
In order for you to comprehend your cover, both policy schedule and policy wording should be read in conjunction with each other.
This way, you are prepared with awareness of what you are insured for, any applicable exclusions, and any endorsements made to your cover, prior to suffering a loss.
The only time a policy is tested, is when you have a claim.
Make sure you are adequately insured, fully understand what you can claim, and what is excluded from cover, before you have a loss.