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Personal Lines Insurance
Sunday, January 1, 2012
Travel tip

Before you leave on holiday householders should not overlook the importance of checking and perhaps updating their short term insurance cover. Essentially, there are two areas of risk that increase when on holiday: the vacant home; and the personal effects that are taken with you.

Willem Smith, CEO of iWYZE, reminds householders that insurers will only settle an agreed burglary claim in full if the policyholder is adequately insured. Contents must usually be insured for full replacement value, for example, otherwise a claim would be adjusted for underinsurance. The principle is simply: if your household contents are worth R1m and your insurance policy only says R800 000 then you are 20% underinsured. So even before considering the merits of a claim in terms of alarm systems, adequate protection and so on, so the very least the claimant will only receive 80% off his agreed claim.
Smith says ensure that:
• your goods are insured for their current replacement value, i.e. their current store price rather than the price that you paid many years ago;
• you inform your insurer to update the total cover amount whenever you purchase items of significant value, e.g. a top of the range 3-D television set;
• bear in mind that some items need to be specifically covered and are not necessarily classified as part of your household goods. Examples include items that are of significant value and are often taken out of the house such as iPods, laptops, cameras, jewellery and so on. Your insurance company needs to insure such items individually at a higher premium rate for you to be fully covered.
The rate you pay will unlikely vary if you are an existing customer. But Smith points out that where there is a tendency for new clients to take out insurance only when they are planning a holiday, only to cancel the policy on their return, will face a much higher rate. “This is because many people who don’t normally have cover for their home contents, unless they go on holiday, say, out of fear of burglaries, will drive up administration costs and increase the risk of claims. Hence, insurers will be more circumspect about who they accept as clients, especially during the traditional year-end holiday season.”
Remember, that if you buy or receive an item worth more than R10 000, it is important to add this to your insurance right away. The holiday review can reveal any omissions during the year. This is especially important for any item you might be taking with you, such as jewellery, a digital camera or a laptop. Indeed, such items need to be “specified” in the policy.
It is also a good idea to keep receipts, which would make it easier to prove ownership in the event of a claim. Part of the challenge for insurers is dealing with clients who make false claims. These fraudulent attempts obviously affect honest clients just as much because they end up having to pay higher premiums to ensure the viability of the fund.
Insurers look closely at claims involving high-priced items. In the case of jewellery, watches, furs, precious metals, rugs and loose carpets, clients should keep the original valuation certificate or purchase invoice. “The more proof of ownership and proof of value you have, the faster the process and the greater your chance of receiving the correct compensation in the event of a loss,” notes Smith.
Most insurance policies, incidentally, cover guests’ possessions, but check as some underwriters only offer this cover as an optional extra. Generally speaking insurers do not cover cash as it is very difficult, at claims stage, to prove how much money was lost. If a policy does provide cover it will certainly be limited to, say, R1 000 to R2 000.
If you have a member of your household staying at a student residence during term time, it will be worth checking the extent of your household policy. You may need extra insurance, or at least be required to itemise belongings taken to the residence and the period of cover. As always, it is better to check rather than do nothing.
Finally, note that accidental damage may be an optional benefit under householders’ cover. For example, you may want to ensure you have cover in case a visitor larking about accidentally knocks your television off its stand.

Copyright © Insurance Times and Investments® Vol:25.1 1st January, 2012
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