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Know Your Policy – Part 9; Underinsurance – Don’t let it happen to you

By Kayser Baird | Durban | June 29, 2016


The majority of personal policy holders are currently undinsured for house contents, the consequences can be devastating.

~Kayser Baird Insurance






What is House Contents cover?

House Contents insurance is a section on your personal policy, which may include your vehicles, buildings and specified all risks items. House Contents insurance covers your personal belongings inside your home for fire, theft and various other risks.

What is the danger of being underinsured for House Contents?

There are two very important points to understand;

1. You must include ALL of your belongings in your sum insured
2. You must insure your belongings at NEW REPLACEMENT value

In other words, you cannot leave out your lounge suite from your house contents sum insured just because it is old, or you don’t want to insure it. If you do, you will be underinsured and average will be applied to your claim, even if it is a small claim.

How does average work?

If the new replacement value of all your belongings is R800,000 and you are only insured for R400,000 – you will only be paid out 50% of any claim. If your house is destroyed in a fire and all of your belongings are destroyed, you would not be paid out the R400,000 that you are insured for, but R200,000. If only some of your belongings are destroyed, for example R100,000, you would be paid out R50,000.

Average is applied by all insurance companies on various different types of insurance, and all insurance companies require you to insure your House Contents at full replacement value.

What are the primary reasons for people being underinsured for House Contents?

Two years ago a Macbook Pro 5 may have cost you R20,000, as of June 2016 it will cost you more than R35,000. The same applies with many other items inside your home to a lesser or greater extent. Although your insurance company may increase your house contents sum insured by 10% per year at renewal, your own particular circumstances may require a larger increase in your sum insured. Your neighbour may have an identical house to yours, but have double the value of House Contents – he will have more claims at higher values, so an insurance company cannot collect the same premium from both of you. As a result – you both need to insure at full replacement value and if you do not average will be applied.

Where to from here?

Contact your policy adminstrator at Kayser Baird to discuss your cover, we have a number of tools and methods to assist you with assessing and correcting your house contents sum insured. 031 – 767 8000.


Kayser Baird offers both Personal and Business short term insurance and is a leading South African broker. To request a quote for your personal insurance please contact us.

Read previous posts in the “Know Your Policy” series;

Part 1 – The Average Clause
Part 2 – All Risks Cover
Part 3 – Residential Buildings Insurance
Part 4 – Your Policy Excess Structure
Part 5 – Convenience Benefits
Part 6 – Load shedding and your personal policy
Part 7 – Optional extensions on your personal policy
Part 8 – Your Motor Excess


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