In today’s world, where a home is often the most significant investment for many, understanding home insurance is crucial to avoid financial loss during claims. Christelle Colman, CEO of Ami Underwriting Managers, highlights several common mistakes homeowners make, leading to potential claim rejections or reduced payouts due to underinsurance.
Contents Underinsurance: A Major Issue
One major challenge homeowners face is not insuring their home contents at the correct, updated replacement value. Colman notes, “Many simply renew their policy annually without adjusting the cover, despite acquiring new items. If your insurance covers only half of your home’s contents value, you might only receive half the payout in a claim.”
Inflation and Valuation of Contents
Forgetting to consider inflation is another oversight. “An item worth R5,000 a decade ago might cost double today. Regular valuation of contents, especially for items like jewellery, and updating these values with your insurer is vital,” explains Colman.
Defective Alarm Systems
Maintaining the home’s alarm system is essential. “Insurance policies generally require the alarm to be fully functional. If theft occurs due to a faulty alarm system, including a dead battery, the claim might be repudiated,” she states.
Poor Maintenance and its Consequences
Colman emphasizes that poor home maintenance can increase the risk of insurance claim rejections. “Insurance typically covers unforeseen damage, not issues arising from neglect or poor maintenance.”
Certification of Gas and Electric Installations
Regarding gas installations and electric fences, Colman advises adherence to regulations. “For gas installations, a Certificate of Conformity from an authorized person registered with the LPGAS is crucial. Similarly, for electric fences, compliance with the Electric Machinery Regulations of 2011 is mandatory. Non-compliance in these areas could lead to claim rejections.”
Colman concludes by stressing the importance of understanding and correctly managing home insurance policies. Additionally, engaging with a knowledgeable insurance broker can provide invaluable guidance in navigating these complexities, ensuring homeowners are adequately covered and prepared.