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The prob­a­bil­ity of hav­ing your home com­pletely de­stroyed by a fire is low, but it is one of those events that has the po­ten­tial to com­pletely de­stroy you fi­nan­cially. De­spite this, the ex­ec­u­tive mayor of the Knysna Mu­nic­i­pal­ity, Eleanore Bouw-Spies, has re­port­edly said that more than 50% of the homes dam­aged by a wild­fire last month, the ma­jor­ity of which were for­mal dwellings, were not in­sured.

There are also con­cerns that many res­i­dents may have had in­sur­ance, but were un­der­in­sured. Peo­ple are of­ten un­der­in­sured when it comes to their house­hold con­tents, as well as for the value of the house it­self. This can be par­tic­u­larly true if you have not re­viewed your in­sur­ance in a long time as house­hold con­tents will be worth more and con­struct­ing a new home will cost more.

The fire in Knysna de­stroyed about 600 homes, dis­plac­ing more than 10 000 peo­ple.

It was ini­tially es­ti­mated that the dam­age to prop­erty to­talled R4 bil­lion to R6 bil­lion, but this fig­ure may end up be­ing much higher.

Ac­cord­ing to Stan­dard In­sur­ance Limited, the fires in Knysna, Plet­ten­berg Bay and other small towns in the West­ern Cape that started on June 7, as well as storm dam­age in Cape Town on the same day, re­sulted in an ini­tial es­ti­mate of R100 mil­lion in claims for the com­pany.

Mean­while, Alexan­der Forbes es­ti­mates its losses from the Knysna fires to be R46 mil­lion from the 65 claims re­ported to date.

At the time of writ­ing, in­sur­ers were still adding up the costs and pay­ing out claims, so the full ex­tent of un­der­in­sur­ance is not known, but anec­do­tal ev­i­dence shows that many peo­ple sim­ply can­not af­ford to re­build and re­fur­nish their homes.

If you’ve been af­fected by fire or a sim­i­lar event, here’s what you can do to en­sure you have the right cover: Make sure you are cov­ered for ev­ery­thing Michael van Niek­erk, the CEO of ASP Fire, a pro­tec­tion so­lu­tion provider, says that home­own­ers gen­er­ally suf­fer a short­fall af­ter dis­as­ters such as this be­cause they don’t in­sure them­selves ad­e­quately. He points out that house­hold con­tents such as paint­ings, clothes and ap­pli­ances can be worth as much in value as the house, so, when it’s time to make a claim, there’s no money left over to re­build the home.

“There are de­mo­li­tion costs and ar­chi­tects fees – you’d have to get it all re­designed,” he says.

Lizette Eras­mus, in­sur­ance ex­pert at In­te­griSure, adds that most poli­cies in­clude the re­build­ing costs, but there are a few in­sur­ers that don’t in­clude this and have it as an op­tional ex­tra – so check your pa­per­work. Look at the re­place­ment cost Eras­mus says that peo­ple are of­ten un­der­in­sured be­cause they may have old fur­ni­ture, for ex­am­ple, and be­lieve it is not worth much, so they don’t in­sure it. How­ever, it’s key to in­sure items based on the re­place­ment value, rather than how much you think some­thing is worth. Get cover for the ex­tras Eras­mus en­cour­ages house­holds to con­sider in­sur­ing ex­tras such as swim­ming pools and bound­ary walls be­cause these can be ex­pen­sive to re­place af­ter a dis­as­ter strikes. Con­sider your op­tions care­fully Ex­perts are di­vided as to whether res­i­dents in Knysna will see an in­crease in their in­sur­ance pre­mi­ums af­ter the fires. The con­sen­sus, though, is that in­sur­ers will most likely main­tain their pre­mi­ums for the first year and then es­ca­late them in the sec­ond. If you’re not happy about this, you can switch in­sur­ers.

An­nelie Smith, cor­po­rate ex­ec­u­tive at Risk Ben­e­fit So­lu­tions, says: “It is pos­si­ble that some in­sur­ers could of­fer you bet­ter pre­mi­ums, but al­ways make sure that the

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DE­STROYED IN SEC­ONDS A burnt-out car and the ru­ins of build­ings can be seen af­ter the dev­as­tat­ing fires in Knysna last month

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