Most people understand that House Contents insurance covers you for loss or damage against all insured perils whilst inside your residential property.
However, when people leave their houses and take belongings with them, things become a bit vague. This post is to tell you more about how to correctly insure your belongings when you are away from your home.
The All-Risk section enables you to individually specify items such as camera’s, laptops, jewellery, sporting equipment etc. and also to take blanket cover for clothing and personal effects when you are away from your house. The cover is generally referred to as “All Risks” because it covers you for any type of loss, including water damage, accidental damage or simply leaving an item on a restaurant table or on the roof of your car. The term “All Risks” essentially means that you are covered for any loss, except for what is excluded on your policy, whereas most other insurance classes are “Perils Based” which means that your policy outlines what you are covered for.
All Risks cover can be more expensive than other types of cover, because the cover is so broad, and you will claim more frequently under this section than under other sections of your policy.
We would recommend taking a minimum of R5000 to R10,000 “Clothing and Personal Effects” cover under All Risks, and then also specifying individual items that you would want to claim for if they were lost, stolen or damaged. Clothing and Personal Effects is blanket cover, that will allow you to claim up to a certain value per item, for things like clothing, sunglasses, shoes, bags etc. You cannot claim for laptops, cell phones or tablets under Clothing and Personal Effects.
Why do insurance companies sometimes pay out less than the insured value for All Risks claims?
Your contract with your insurance company is that you have to pay them a premium, and they have to put you back in the same position if you suffer a loss. You need to insure your belongings at the value that it would cost you to replace them, but the insurance company is entitled to either replace your item or to pay you out in cash. If you request a cash payment, the insurance company will pay you what it would have cost them to replace the item, which can sometimes be a lot less than you because they have economies of scale and can buy certain items cheaper than you can. This is an important efficiency in the insurance industry and if the insurance companies did not leverage their scale to buy things for cheaper, we would all pay more for our insurance.
You have to insure the item at the full replacement value, because it may cost this full value to replace the item in the event of a loss.
If you under-insure your All Risks items, the insurance company will only pay out up the amount insured and if there is a shortfall this will be for your account.
What should I insure under All Risks?
There is no rule of thumb here because it is down to personal preference and your appetite for risk, but you should certainly consider insuring items that you could not afford to replace if they were lost or damaged. It is especially important to insure items that you cannot do without, for example cell phones or expensive sporting equipment for enthusiasts.
What are my responsibilities if I need to claim?
Your insurance company reserves the right to request proof of ownership in the event of a claim. If you claim for jewellery under the All-Risks section of your policy – you will usually be required to present a valuation certificate before the claim will be processed. Some insurers will require this before they even add the jewellery onto the policy. If you cannot produce the requested documentation, it is at the insurance companies’ discretion whether or not to pay the claim. It is therefore very important to retain invoices, receipts and till slips for items purchased. In the event of items being acquired by other means, you must obtain a valuation certificate.
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