Check the terms of your in­surance poli­cies to avoid nasty sur­prises

Weekend Argus (Saturday Edition) - - PERSONAL FINANCE - NEESA MOOD­LEY-ISAACS

Now that the worst of the re­ces­sion is be­hind us, it is even more im­por­tant that you re­view your short-ter m in­surance poli­cies reg­u­larly, be­cause you face re­ceiv­ing only a par­tial pay­out or hav­ing your claim re­jected if your pol­icy is not up to date with, for ex­am­ple, the in­sured value of your pos­ses­sions.

Deb­bie Bar­ret, the gen­eral man­ager of mar­ket­ing at First Na­tional Bank (FNB) In­surance Bro­kers, says many con­sumers are still un­der pres­sure fol­low­ing the re­ces­sion and “may be tempted into false economies by fail­ing to re­view their poli­cies”.

To guard against costly sur­prises, FNB In­surance Bro­kers ad­vises that you re­view your poli­cies and pay par­tic­u­lar at­ten­tion to any re­stric­tions and ex­clu­sions. Bar­ret says the “grey ar­eas” in­clude:

Per­sonal be­long­ings. Bar­ret says un­der-in­surance is a ma­jor prob­lem. You should reg­u­larly re­view your poli­cies and the value of your in­sured items to take ac­count of in­fla­tion.

For ex­am­ple, if you bought a TV set five years ago for R3 000, a sim­i­lar re­place­ment to­day would cost far more than R3 000, and you need to update your cover ac­cord­ingly. If you fail to do this, you risk a par­tial set­tle­ment of your claim. For ex­am­ple, if you took out cover for R250 000 on your per­sonal pos­ses­sions and the in­surer finds that your pos­ses­sions were ac­tu­ally worth R500 000, the in­surer is likely to ap­ply the rule of av­er­age and will pay you only 50 per­cent of your claim.

You should do an an­nual in­ven­tory of your in­sured items – your in­surer can re­fer you to a val­uer for this pur­pose and, in some cases, your in­surer will pay the val­uer’s costs.

All-risks cover. This cover ap­plies to per­sonal por­ta­ble items. You may as­sume that cover for such items is in­cluded au­to­mat­i­cally in your house­hold con­tents in­surance. How­ever, you should spec­ify ex­pen­sive items, such as lap­top com­put­ers and cell­phones, un­der your all-risks cover, be­cause the max­i­mum al­lrisk amount may not be suf­fi­cient to cover the re­place­ment cost of the in­di­vid­ual items. You should also spec­ify your jew­ellery and ex­pen­sive branded goods, such as de­signer hand­bags.

Home dam­age. Full home­owner’s in­surance is far from au­to­matic. You have a duty to en­sure that you main­tain your prop­erty. For ex­am­ple, if you fail to main­tain your roof and al­low your gut­ters and down-pipes to clog up, a claim for rain­wa­ter dam­age may be re­pu­di­ated.

Car value. You should check the value for which your ve­hi­cle is in­sured. If it is in­sured for mar­ket value, the in­sured amount should de­crease each year as your car’s mar­ket value de­creases and your premi­ums may in­crease less dra­mat­i­cally. Your in­surer will in­crease your premi­ums to a cer­tain ex­tent to cover the con­tin­gency of a mo­tor ve­hi­cle ac­ci­dent where your car needs to be re­paired.

If your car is in­sured for its re­place­ment value, the in­sured value is un­likely to de­crease each year but will be ad­justed by the in­surer for in­fla­tion.

Car hire. In terms of your pol­icy, free car hire may be avail­able fol­low­ing an ac­ci­dent, theft or hi­jack­ing, but there may be ex­clu­sions or re­stric­tions. For ex­am­ple, you may have free car hire only if you use a par­tic­u­lar car hire com­pany or you may be re­stricted to only five days of free hire. So, you may not have the blan­ket cover you as­sumed.

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