Many consumers, especially those who are renting a property, do not fully understand the absolute necessity of home contents insurance. Regardless of whether someone owns or rents a property, it is a good idea to take out home contents insurance as this type of cover will pay to replace or repair items inside the home that may be stolen or damaged due to unforeseen events. This is according to Nazeer Hoosen, Chief Executive Officer of PPS Short-Term Insurance.
He says home contents insurance can help people save money in the long run. “It is devastating to have one’s personal belongings damaged or stolen and this situation is made even worse when they have to spend money to repair or replace items because they were not insured.”
Hoosen debunks some common myths associated with home contents insurance below;
People who rent do not need home contents insurance
While individuals who rent a house or apartment do not have to worry about insuring the structures and actual building, they must certainly consider home contents insurance to cover their personal possessions inside the dwelling. It is essential that expensive items such as couches, dining sets, electronics and kitchen appliances are sufficiently insured in order to replace these items should they break, get damaged or are stolen.
Homeowners insurance includes contents insurance
Unless specified, homeowners insurance usually only covers against accidental or unforeseen damage to the physical structure of the property. Some renters mistakenly assume that their belongings are covered by their landlord’s insurance policy. However, homeowners insurance does not cover the items located inside the property and therefore a separate home contents policy has to be in place.
Home contents insurance covers all types of damages
Home contents insurance typically covers against damage to the moveable contents in the home caused by events such as fire, flooding, storms, lightening, theft or malice. Damage caused by accidental events, such as dropping or stepping on an item, are usually not included in the policy but often offered as an optional extra cover which can be taken out.
Items that are taken outside of the home, such as a mobile device, laptop or tablet, are usually covered under All Risk cover which can also be taken out separately in order to cover accidental loss or damage to these type of belongings. It is vital that people are fully aware of exactly what their policy covers and what it does not to ensure that they have cover in place for every eventuality.
A home contents evaluation is only done once
Many people think that they only need to conduct a home contents valuation prior to taking out their home contents insurance policy to ascertain the collective value of the possessions in their home. In reality, it is essential to review the value of the contents on a regular basis to ensure that the policy reflects the true replacement value of all items to avoid being underinsured.
It is advisable to conduct re-evaluations annually to take price inflation and currency fluctuation into consideration. For example, a piece of art purchased overseas which cost R5 000 five years ago could now cost double that amount to replace. It is also important to conduct a valuation when additional home contents are purchased which can drastically bump up the value of the home contents, such as a new entertainment system. The last thing people want is to find out that they will not be receiving the full replacement amount to replace an expensive item as a result of failing to update the replacement values in their insurance policy.
The consequence of not conducting regular evaluations means that the insurer will apply the principle of under insurance to a claim, which in essence is the insurer at the time of a claim assessing the current value of your contents against what you were insured for and applying this proportion to your claim value.
“The best way for consumers to ensure that they are sufficiently covered for all their home contents is to seek the advice of a reputable broker. People who do not consider home contents insurance as a necessity are urged to consider the financial devastation should a disaster destroy all or most of their belongings and they have to replace it themselves,” adds Hoosen.