Did you know that if you underinsure your home contents, your insurer will only pay out a percentage of what you claimed? It’s like ordering a large pizza and only getting 1 slice. Tragic.
The math of underinsurance (don’t worry, it’s simple)
– If your stuff is worth R400,000 but you only insured it for R200,000, guess what? You’ll only get half the value of what you claim.
– That means if your R10,000 laptop is stolen, your insurer might only pay R5,000.
– And that’s how you end up buying a tablet instead of a new laptop.
Avoiding this financial horror story
Step 1: Make a home contents inventory (yes, even that limited edition collector’s mug you never use).
Step 2: Assign accurate values because, let’s face it, your fridge costs more now than when you bought it in 2015.
Step 3: Update your insurance policy so that it reflects the actual worth of your possessions.
The bottom line
Don’t scam yourself into a bad insurance payout. Review your policy, update your inventory, and make sure you’re fully covered. Otherwise, you might end up with half a couch, half a laptop, and a whole lot of regret.
FAQs
Underinsurance is a scam (that you might be pulling on yourself)
1. What exactly is underinsurance?
Underinsurance happens when you insure your belongings for less than their actual replacement value. If your stuff is worth R500,000 but you only insured it for R250,000, your payout on a claim will be 50% less than what you need.
2. How do I know if I’m underinsured?
Compare the total insured amount in your home contents policy to the actual cost of replacing everything at today’s prices. If there’s a big gap, you need to increase your cover!
3. If I make a claim and I’m underinsured, what happens?
Your payout is reduced proportionally. If you are insured for half of what your home contents are worth, you’ll only get half of any claim. It’s like ordering a full meal and getting just the side salad, which is frustrating and unsatisfying.
4. How can I fix underinsurance?
Do a home inventory, check replacement costs, and update your policy accordingly. Insurers allow you to adjust your cover at any time, so don’t wait for disaster to strike before fixing it!
5. Is home contents insurance a once-off thing, or should I review it regularly?
It’s a month-to-month contract, so you should review your policy annually and update it after big purchases or decluttering sprees. Don’t end up paying for stuff you don’t own or worse, not properly insuring things you do own!
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