Insurers expected to reassess fire risks

FOLLOWINGthe fires in the south peninsula, insurers will be forced to reassess how future property buyers will be insured in that area.

If an area exhibited a trend for fires, new stipulations would be put in place when underwriting future clients, Aon Insurance client service manager Aven Kistan said.

“This may include consumers needing to live a certain distance from the fire station or owning a fire extinguisher in their home. The onus might also be on the consumer to clear vegetation that could cause fires to spread around homes,” he said.

Afire disaster would hit insurance companies hard, Kistan said, but added most insurers had a catastrophe plan that was not part of normal insurance. This meant someone in Durban would not face a higher premium after a natural disaster in Cape Town.

Head of insurance expertise at IntergriSure Lizette Erasmus said it was vital for residents in fire vulnerable areas like Noordhoek and Muizenberg to ensure that they were fully prepared for fire risks.

“When you review your policy, it’s good to check whether your policy will cover the full extent of the fire damage. Besides the actual cost of the damage, extra costs for rebuilding the property are often forgotten about when consumers take insurance.

“South Africans are also notorious for being underinsured and this will cost you dearly in the case of a fire. Currently it is predicted that 80 percent of South Africans are underinsured.”

Aon South Africa’s Mandy Barret said an underinsured homeowner could end up being paid partially. “Insurers call it the ‘average formula’, which means that if your property is underinsured by 50 percent, for example, they may only pay 50 percent of your claim. This easily happens where a home was bought a number of years ago,” she said.

Insurers warn that you can’t afford to be without insurance, even if it means paying a lower premium and a higher excess amount.