Is Your Insurance Safety Net Unravelling?
A Guide to Home Contents Valuation and Claim Success
Expert Contributor:
Edite Teixeira-Mckinon
Lead Ombud: Non-life Insurance Division, National Financial Ombud Scheme (NFO)
Home Contents
Protects personal belongings inside the house (furniture, appliances, clothing, jewelry).
Building Insurance
Covers the physical structure and permanent fixtures of the property.
3 Factors Determining Your Payout
1. The “Principle of Average”
Underinsurance occurs when contents are not insured for their current replacement value. If you are only insured for 70% of the true value, the insurer may only pay 70% of your claim. Regular reviews of the “sum insured” are essential to stay aligned with rising costs.
2. Replacement Value vs. Depreciation
“Jewellery appreciates, technology depreciates, and replacement costs shift constantly,” notes Teixeira-Mckinon. Policies typically cover the cost to replace an item brand new, not the original price you paid years ago.
3. Proof of Quantum
The burden of proof lies with you. Keep receipts, certificates, and photos. Crucial Warning: Never submit false documents. The “total forfeiture clause” means one fraudulent item can result in your entire claim being rejected.
◈ Case Study: The R155,000 Ring
A policyholder recently challenged a R59,030 settlement for a stolen ring insured for R155,000. The NFO ruled in favor of the insurer.
The Lesson: The insurer’s obligation is to put you back in the same position you were in. If they can replace the item for R59,030, that is the limit of their liability. The “Sum Insured” is a maximum ceiling, not a guaranteed payout.
