Yay! It’s your birthday and your spouse has just given you the latest generation iPad to match your beloved iPhone. Before you start traipsing to the malls and coffee shops with your flash new iPad, you should call your insurer to update your short term insurance policy.
All too often clients forget to update their insurance policy and only realise their error when they need to make a claim. You should ideally update your short term insurance policy at least once a year.
Here are our top tips:
New possessions must be included in updatesWhen you obtain new valuable items such as cellphones and electronic accessories including mobile tablets, you need to add these items to your insurance policy. Find out if you need to specify these items or if they are automatically covered under “all-risks” as they are mobile items. Some insurance policies automatically cover mobile goods and other policies require items over a specific value, for example, R3 000, to be specified.
In general, regular valuations of your home contents are recommended not only to take into account updated replacement values but also new possessions such as a spanking new home entertainment centre.
Regular jewellery evaluationsIt can cost you from as little as a flat fee of R150 to an upfront charge of R200 and then R50 per item thereafter, but having your jewellery valued regularly is something you should seriously consider. The gold price has rocketed over the past 15 years and the necklace you paid R10 000 for in 2001 is worth considerably more today. Your jewellery valuation certificate should include a photo of the item, a full description with weight, and the date of the valuation and the gold price at the time of the valuation.
Insure for replacement valueRemember that values need to be updated as you want to be insured for replacement value or what you would pay if you were to buy the same item today. If you undertake any renovations around your home, this will increase the value of your home and you need to update your homeowners’ insurance.
Keep records!Keep a file of receipts for all expensive items such as jewellery and electronic goods so that you have proof of purchase if the insurer questions the value you have insured the item for.
The danger of under-insuranceIf you are under-insured, or the insured value of your possessions is less than the actual value, then the insurer will apply what is known as the “average clause”. This means that your claim is reduced in proportion to the amount of underinsurance. For example, if you are claiming for household contents to the value of R1 million but you are underinsured by 50%, then the insurer will only pay out R500 000 or 50% of the claim.
Outsource the valuations processIf the thought of going from room to room doing a valuation yourself is tedious, you should find out if your insurer offers a valuation service for your household contents. This means the insurer will send a valuation officer to your home to carry out a full valuation of all your household contents and ensure that you are insured correctly. The service may be free or you may have to pay a small fee but either way, it will be cheaper than paying a valuation company out of your own pocket.
Updating your short term insurance policy can take some time but the effort is well worth it to avoid a dispute or being caught short when you make a claim.