In case of fire, know your stuff – some notes on home content insurance

Because every person’s situation is unique, we can only provide general information in this blog. It does not constitute or should not replace the advice of a broker that deals with home content insurance.

In June 2017, in what is considered the worst fire in South African history since the Great Fire of 1869, 600 houses burnt down in the Knysna-Plettenberg Bay area. These fires displaced just under 10 000 people. It was a human tragedy of epic proportions, made worse by the fact that many of the homes were under insured.

Despite climate change, the likelihood that your house will burn down is thankfully quite low. However, there are few things that are as completely and utterly devastating. Statistics tells us that of those who do have household insurance one in three are under insured by about 30%.

Homeowners insurance vs home content insurance

First things first – homeowner’s insurance and home content insurance are not the same! The former covers the actual structures – all the bits that are cemented and bolted down to form the dwelling. Home content insurance covers everything you put inside it – all the bits that would fall out if you were able to pick up the house, turn it upside down and shake it!

Things to remember

  • The overall value of your insurance should reflect what it would cost you to replace all of the items in the policy TODAY. Let us say you bought a TV in 1973 for R700. If you wanted to replace the TV now, it would cost you much more – probably closer to R7000! You must insure the item for THIS amount, not for what you paid for it in 1973.
  • Some items may be more valuable than others. Insurance companies have different thresholds for the maximum value of regular items. It is important that you find out what those amounts are!
  • Some of your most prized items are regularly taken out of the home, like your glasses, your ‘phone and your laptop. These cannot be insured under household content insurance. These items need to be insured under ‘All Risks’ insurance. Generally, smaller or cheaper objects can be insured as unspecified items. You need to document more expensive possessions as specified items. Some items may seem to fall somewhere in between these categories. Your insurance company will have to tell you under which category they want you to place these.
HOUSEHOLD INSURANCE
(the things that do not leave the house)
ALL RISKS INSURANCE
(things that leave the house with you)
GENERAL ITEMSHIGHER VALUE ITEMSUNSPECIFIED
(normally lower valued items)
SPECIFIED
(more expensive items)
These are regular household items, like your pressure cooker and bed and Lazy Boy chair.It is important to have valuation certificates and photographs as evidence.

These valuations may need to be updated from time to time. A rare or historical item may steadily increase in value.

Ask about the company’s rules.

E.g. Your grandfather’s grandfather clock or the Innes Rose pastel sketch you inherited from your mother.
Each insurer will have their own lists of what are or are not included under this section, check with them and do not assume things!

E.g. Your prescription sunglasses, GPS device and your keys
It is important to keep copies of any invoices and valuation certificates as appropriate.

Valuation certificates may need to be updated as the value of more contemporary jewellery may fluctuate, depend on the price of precious metals or gemstones.

E.g. Your Apple Mac laptop, Tablet and iPhone, your great aunt’s watch and your 24-karat tie pin with the diamond from your wedding
  • You must regularly update the content of your policy. If you do not, you could be short paid by the insurer should you need to make a claim.
  • Many insurers offer discounted rates if you combine your home, home content and car insurance policies.
  • Be loyal to yourself, first. Compare insurance prices and your needs annually.

Claiming from your insurer

Claiming from your insurance is not as easy as you think. If a fire or flood destroys the contents of your house, your insurance company will not take your word for it! They will send an assessor to your home. You will be paid out according to a formula that will be explained at the time of the claim.

In the case of theft, the process becomes a lot more complicated. Again, an assessor will be tasked with investigating your claim. It is vital that you can prove that the burglar bars, security gates and burglar alarms, as specified by your insurer in the policy, was installed, maintained and in use when the crime took place.

Should you not be happy with the outcome of the assessor’s determination, you should appeal to the Ombud for Short-term Insurance. You can find all the information you need at www.osti.co.za.

Separating fiction from fact

Do you think you have a good idea of the value of things? Do you reckon you could guess how much your stuff is worth, without calculations? Write your best guess down! When you are done with compiling all your lists and the necessary calculations, review this number and see how close you came to the real figure.

How to go about valuing your home content

  1. Get off the couch!

    You do need to go from room to room. You do need to open the drawers and the cupboards and look for what is lurking at the back of the cupboard, under the bed and behind the door. You would be surprised at just how much STUFF you can hide from yourself! Remember to include the value of the curtains – thieves often use the curtains to carry out their loot!
  1. Grab your phone!

    This is not so much so that you can call a friend for support, though you may need that. Use your phone camera to take a video of the room so that you have a record of where everything is kept. Take photos of individual items, showing any serial numbers or distinguishing features.
  1. Utilise an electronic or manual writing device!

    Make a list of all the items in the room. Next to each, record what year you bought it (if you have the details, otherwise your best guess.) Write down the make and model where appropriate.
  1. Investigate the garage and any other storage facilities on the property!

    Remember to look in all the nooks and crannies. Do not forget to take a walk outside. Do record any outdoor furniture as well as the Weber. You need to let the insurer know if you have a swimming pool (and therefore a swimming pool pump) a motorised gate (and therefore a motor and battery) or a borehole (and therefore a borehole pump).

Reviewing the completed inventory is where the real fun starts

  1. Search your documents!

    On your list, make a column for guarantees and records of the purchase. Go through That Drawer where you Keep All the Important Documents that you have been meaning to organise for the last two years. See if there are any warrantees or proof of purchases that are of importance to keep. Take a photo of each paper record or scan these and store it safely on a Cloud. File the originals All Together Somewhere Safe.
  1. Search the Net!

    If you have older teenagers or young adults around, or a partner that could benefit from this exercise, now is the time to bring them on board! In yet another column next to each item, write down what you think it will cost to replace each item. Then check this replacement price on the internet. Write the latter amounts down in its own column.

In the final analysis

Once you have determined these amounts you will be able to calculate a realistic figure for each room and then come up with the grand total for all your earthly possessions. If you struggle with sums or just want an added tool to make sure you have not left anything out, you could also use one of the online calculators offered by insurance companies.

Money cannot replace your memories

There are computer programmes and phone Apps available on which you can record, remaster and store copies of rare, historical or photos of sentimental value. You can also store negatives on many of these. If you kept decent digital records, the insurance company may pay to have these printed out.

But wait! Where shall I put it?

Do make sure that you keep your lists and videos or photos somewhere safe! Preferably do not keep these in That Drawer where you Keep All the Important Documents – if a fire breaks out, you don’t want it going up in smoke! Your broker may keep records, but it is still your responsibility to make sure you preserve these, too. It will help tremendously, should you need to make or defend an insurance claim in the future.

Insurance companies have rules about where you store important or valuable items. They will not want you to keep your Kruger Rands in your sock drawer! They will specify the type of safe you require.

Final Words

This sounds like a massive job… and it is! At least at first. The thing is, if you did not spend the time, resources and energy on this task and the worst happens, you will sorely regret it. Can you live with that?

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