A home is often the single most expensive asset that many people own, yet when it comes to insuring that asset, there are some common mistakes homeowners make which can result in financial losses in the event that they need to file an insurance claim.
This is according to Christelle Fourie, Managing Director of MUA Insurance Acceptances, who says homeowners often do not fully understand their home insurance policies and as a result expose themselves unnecessarily to the risk of an insurance claim rejection or a reduced pay-out as a result of underinsurance. “Homeowners can actually avoid these repercussions by making themselves more aware of these common mistakes.”
Fourie says a big problem many homeowners face when insuring the contents of their home is failing to insure the contents for the correct and updated replacement value. “Most people tend to take out a home contents insurance policy and simply renew it every year, without taking the necessary steps to update their level of cover, despite having purchased new contents for their home.
“Homeowners must realise that the impact of underinsuring their contents can have huge implications when it comes time to claim. For example, if a home contents insurance policy provides cover for R150 000 but the contents of the home are actually worth R300 000, this means the homeowner is actually underinsured by 50%. As the premium only covers the risk of half of your household goods, the insurance company will most probably only pay out half of the claim, so the insured would receive R75 000 if they filed a claim for R150 000.”
She says another common problem with regards to insuring home contents is forgetting to take price inflation into consideration. “A piece of electrical equipment that cost R5 000 ten years ago, could now cost twice that to replace. This is why it is so important to conduct regular valuations of home contents and provide this updated value to the insurance provider to ensure adequate cover, especially when it comes providing accurate values for any jewellery you may have.”
Defective alarm systems
Many homeowners do not realise the importance of ensuring that the home’s alarm system is tested on a regular basis to ensure it is in working order, says Fourie. “All homeowners insurance policies will stipulate that it is the policy holder’s responsibility to keep the alarm system in full working condition because if theft takes place as a result of a faulty alarm, then the claim is likely to be repudiated. This includes the alarm battery being flat.”
“Homeowners who fail to properly maintain their homes place themselves at an increased risk of insurance claim repudiations. Most homeowner insurance policies will only cover damage caused by unforeseen events and regard home maintenance as the responsibility of the homeowner, thus any claims determined as a result of poor maintenance or neglect are most likely to be rejected,” says Fourie.
Uncertified gas equipment and electric fence installations
Fourie says according to the regulations that were introduced in 2009, all gas installations must have a Certificate of Conformity according to the Pressure Equipment Regulations that have been promulgated under the Occupation Health and Safety Act (No 85 of 1993). “It is critical that this certificate is also issued by an authorised person who is registered with the Liquefied Petroleum Gas Safety Association of Southern Africa (LPGAS).
“If the home is damaged or destroyed, as a result of a defective gas appliance – and the homeowner does not have a valid certificate issued by someone registered with LPGAS – the insurance implications could be significant. An insurance company would be well within their rights to repudiate a claim, which could have severe financial repercussions for the homeowner.”
Electric fence regulations
The same goes for homeowners who are planning to have electric fencing installed or upgraded as it has to comply with new legislation as stipulated in Regulation 12 of the Electric Machinery Regulations of 2011, says Fourie. “This legislation stipulates that all new, upgraded or repaired electric fences are required to comply with strict regulations now governing the industry and the homeowner must have in their possession a certificate of compliance issued by a certified installer. Non-compliant electric fences will place homeowners at risk of insurance claim rejection.”
By keeping the above in mind and understanding home insurance policy, homeowners can lower their risk of insurance claim repudiations, concludes Fourie.
16 July 2014