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KZN flood alert to homeowners and tenants: Are you sufficiently insured against damage and loss?

An overall view of the damage caused by floods in and around Durban on April 12, 2022. PHOTO: Doctor Ngcobo/African News Agency(ANA)

An overall view of the damage caused by floods in and around Durban on April 12, 2022. PHOTO: Doctor Ngcobo/African News Agency(ANA)

Published Apr 12, 2022

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Durban - It often takes a tragedy or significant event to make you take action to protect yourself in case of similar future occurrences – action that you know you should have taken long before.

And with the current flooding in parts of KwaZulu-Natal, many homeowners and tenants are wondering what they are really insured against. Or regretting not being insured at all.

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Weather events have “significant implications” for how people approach their insurance planning in the face of a worst-case scenario, says Mandy Barrett of risk consultants and insurance brokerage, Aon South Africa.

“In the event of a severe weather event such as a flood, fire, or tornado, you are likely to experience a severe loss scenario, potentially having to replace all your household contents and in a worst-case scenario, possibly the entire structure of your home or even your motor vehicle.

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“In a severe or total loss scenario, finding yourself under-insured can prove to be financially devastating, so extra attention needs to be paid as to how robust your insurance planning and coverage is to cater for such an event.”

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The current floods come at a time when many South Africans are still reeling from the financial implications of the Covid-19 pandemic, and many households have had to cut costs to keep their heads above water. For some of them, it may have been their insurance premiums.

“While there is always the temptation to cut insurance costs in a bid to save money, the better approach would be to review covers with your broker and right-size them to achieve better rates and cover,” she says.

“Major assets such as cars and homes are often not correctly insured which is a real concern. If this is the case, you may discover that you are only partially covered because of what insurers call the application of the ‘average formula’ at claims stage.”

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Echoing this, Chris Cilliers, chief executive and co-principal of Lew Geffen Sotheby’s International Realty in the Winelands says home owners grudgingly fork out for insurance every month consoling themselves that at least if something does happen, they are covered, but many don’t realise that they are, in fact, under-insured, and unfortunately most will only find out once it's too late.

“This is especially common among older home owners who have often not updated their insurance policies in many years and, as they are often on a fixed income from pension by then, it can be financially crippling if not devastating when the pay-out falls far short of the replacement value.

“The elderly often have no idea how much their homes are worth as they probably paid about R50 000 for it 40 years ago...”

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