Household Appliance Insurance

Your home is your castle, it is your haven where you can escape from the rest of the world. Your belongings inside your home is also important, you have worked long and hard for it. You may also have personal, precious items such as antique furniture or jewellery that you inherited. In this beautiful country of ours we, unfortunately, deal with a dreadful crime rate and we all run the risk of falling prey to robbery or theft. Even the climate changes are not leaving us unaffected and floods are now experienced in places that never had this problem before.

All these make insurance a necessity. Insuring the furniture and appliances in your home will form part of Householders Insurance. Householders insurance covers the items inside your house that can be moved and include furniture, carpets, curtains, television, radio, kitchen equipment, clothing and computers.

When you apply for household insurance you will be given an inventory on which you must list everything in your house. The total value is the amount that you must insure for. But…it is unfortunately not that simple. There are certain rules in insurance that you should be aware of otherwise you may live under the false impression that you have sufficient insurance cover while you may be totally underinsured.

The first rule is that you need to calculate the replacement value, not market value of all the items listed on your inventory. Let’s say you had flood damage in your kitchen and all the equipment need to be replaced: fridge, stove, washing machine, tumble drier, vacuum cleaner etc. If you insured these items for R10 000 fifteen years ago, what will it cost you to replace these items at today’s prices? Double the amount or even more?

You therefore need to insure your household items at replacement value, not market value. In the insurance world it is also called new-for-old. If you do not calculate a proper value for your household insurance you will be underinsured and the insurance company will only pay out a pro-rata amount of your claim. You can end up suffering a huge financial loss and never be in a position again to replace everything you have lost.

In every instance the insurance company will calculate the replacement cost and if you are paying more than you should you will not receive extra in the case of the claim. Being over-insured is therefore a waste of money, hence the importance of getting it right.

Drawing up a full inventory and assigning replacement values to everything is no small task. Some speciality items such as jewellery, valuable paintings or a coin collection should be valued by a qualified assessor who will provide you with a valuation certificate. When you buy expensive jewellery the jeweller would normally give you a valuation certificate, if not, ask for one.

Another important rule regarding household insurance is that insurers normally limit their liability for any individual item to a maximum amount, usually expressed as a percentage of the total claim. Items like jewellery, fur coats, paintings, television set, sound and camera equipment, private high-value collections and computer equipment would normally fall in this category.

Household insurance policies cover what is referred to as “everyday types of household items”, such as furniture, clothing and small appliances. Any high-value items, be it jewellery, antique furniture, appliances such as cameras, television sets, computers or private collections, must be specified separately and insured separately.

Whenever you purchase any expensive item you must update your inventory and advise your insurer to update your policy accordingly. Do an annual review to ensure that you are still adequately insured.

A good idea is to take photographs of all your high value belongings to keep as proof and part of your inventory. Store your inventory in a safe place off the premises.

Times are tough and some people stop paying their insurance to save money. It could be a decision you will regret for the rest of your life. Rather shop around, see what changes you can make to reduce your monthly insurance expense but don’t cancel it. Combining your car and household insurance will also reduce your premium.

Don’t be caught without cover.