One in three households in South Africa underinsure their home and household contents. Here is why you could be hurting your finances.
It's easy to underestimate the value of your household and its contents. Yet, when you are burgled and lose your physical assets, you are quick to lament.When first walking into your brand new home, you are filled with such pride and value and as you start to build and grow your household content. You quickly forget, however, the true value of each item and how much it would set you back if you were to replace it.Did you know that, when insuring your home, there are actually quite a few individual packages you could insure. Many, however, simply have no idea what they can and cannot insure with household insurance.According to Santam, over 30% of households in South Africa are underinsured. That is one in three households.In 2013, Stats SA produced a report (General Household Survey) with a sample size of 25 330 households. The report showed that 80% of citizens in urban and metro areas across South Africa have TVs, while 78% have refrigerators.
Common Causes of Underinsuring Your Home
Acquiring a new asset, such as a home theatre system, and not updating your household insurance policy.
Forgetting the price of acquiring replacements.
Thinking that insuring your home is irrelevant and low-risk.
Difference Between Household Contents and Home Insurance
What Household Contents Covers
It is important to view your budget and assess what household items you would not be able to comfortably afford to replace, should they become damaged or stolen.These are the household contents you would want to insure. Make sure you update your insurance provider, should you buy an expensive household item that is not on your insurance policy.Some insurance providers like iWyze even allow you to insure the contents of your fridge, should the power go out and all your food spoils. This is in the case of a blackout that lasts longer than 24 hours.
What Home Insurance Covers
Home insurance covers certain structural damages to your home, including:
Theft or attempted theft that causes loss or damage to your contents, following forcible and violent entry to (or exit from) your premises.
Fire, lightning, and explosions.
Loss or damage caused by deliberate or wilful acts.
Natural disasters including storms, the wind, flood, hail, snow or earthquake damage.
Loss or damage caused by water systems failure, including burst, leaking or overflowing geysers, water supply tanks, cisterns and water pipes.
Home insurance does not cost the replacing of items that have been subjected to wear-and-tear unless otherwise stated. This type of insurance is meant to cover sudden and unexpected events only.Keep in mind, every provider will have a list of what they do and do not cover. It is vital to make sure you are aware of what you are and are not covered for in the event of an emergency.
How You Can Benefit From Short-Term Insurance
Most insurance providers offer a discounted premium, on your short-term insurance, should you combine assets such as your household contents and car insurance.