UNDER INSURANCE

Under-insurance occur when the amount for which the property is insured, is less than the value of such property.

Remember to insure your property for its replacement value and NOT for the purchase amount!  (Unless it is new property!)

Where loss/damage occur, there are two insurers, namely:

• the Insurance company, and
• the Insured as his/her own insurer;

EXAMPLE:
    

    Value of property…………………………………….R24 000

    Sum insured…………………………………………..R18 000

    Difference (as his/her own insurer)……………….R  6 000

In event of loss/damage of R12 000, each of the “insurers” contribute as follows:

    INSURANCE COMPANY:

    R18 000/R24 000  X   R12 000/1         =   R 9 000

    INSURED (as his/her own insurer):

    R6 000/R24 000   X   R12 000/1         =   R 3 000

    THUS:  R9 000 + R3 000                    =   R12 000

The condition of average is applicable in respect of the following sections:

• Home Contents Insurance
• Homeowners Insurance (Buildings)
• Sail-boats, motor-boats and other small craft.

The section where under-insurance occur mostly, is the Householders (Contents) Section.  To prevent that the contents of your house is under-insured, you can get an Inventory from us which will help you to be more accurate when selecting the sum to insure for!  Click here to receive an Inventory from us.

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