Jannet Ferguson | Absa Insurance

This year has seen a number of severe catastrophes take place across South Africa: the devastating Knysna fires in June and the storms that lashed both Gauteng and Durban in October. Not only did these disasters cause widespread damage, they also revealed a massive weakness in how prepared most South Africans are for unforeseen calamities.

“These incidents exposed the serious levels of under-insurance in South Africa,” says Jannet Ferguson, General Manager: Technical at Absa Insurance. “The Knysna fires, in particular, revealed that a significant number of people were inadequately covered for catastrophes of that magnitude – where much of a bustling seaside town was burned to the ground, and damage amounted to approximately R4 billion, with 600 homes totally gutted and more than 10 000 people displaced.”

Reports also indicate that more than half of the formal homes affected by the Knysna fires were not insured – and in many cases even where homeowners were insured, it later came out that they were under-insured for the rebuilding and replacement costs.

“As if losing your home, all your beloved possessions in it, as well as irreplaceable memories and sometimes even loved ones or pets isn’t traumatic enough, to then discover that you are not properly insured to cover the full replacement costs of the property and its contents makes the ordeal that much more distressing and difficult to recover from,” Ferguson says.

She says the devastation has highlighted the need for people to evaluate the level of insurance cover they currently have in place and make any necessary changes in order to ensure that they are properly prepared if the worst happens.

Always be prepared

“You should review insurance policies annually to make sure the right level of cover is in place,” she says. “Insurance is very much a grudge purchase so most people tend to take the cheapest option available, often thinking ‘It won’t happen to me’. Unfortunately, sometimes it does happen and that is what the insurance is there for – as a safety net.”

The problem with taking the cheapest option is that you will enjoy fewer benefits. It is critical for you to check your policy’s benefits carefully. Benefits include contingency plans such as where you will live if you lose your home and need to rebuild, what happens to your pets and whether the costs of the fire brigade are covered.

These are factors that might not necessarily even cross your mind in normal day-to-day, but they can have a life-changing impact if the unthinkable happens and you find yourself not adequately prepared. Do not simply choose the cheapest cover because it will have the least noticeable impact on your budget every month. “Rather pay for the product you actually want and need. If you are unsure of what product is right for your needs, speak to your broker, financial adviser or service provider,” Ferguson advises.

Also vital is the level of cover you have on your contents. Make sure you do proper and accurate inventories regularly so that you know the value of your contents and can insure them accordingly. The contents of your home are usually worth more than you know, so it is important to be covered for the right amount.

Benefits and level of cover aren’t the only factors you need to consider. Excesses are another critical part of catastrophe loss insurance, and can make the world of difference in the event of a claim. You should pick the lowest possible excess that you can afford, because should you need to claim, this will have the least negative impact on your pocket – especially at a time when you are already dealing with physical, financial and emotional loss.

“Accurately valuing your assets – from property to contents – means being able to get the right cover for them, so if you are in any way unsure of whether you have adequate insurance in place, get in touch with your broker, financial adviser or insurer immediately,” says Ferguson.