Contents insurance is defined by giving cover to all your possession in your
home that are not part of the actual physical structure and that can be moved
with you. These are the normal contents of your home, like washing machines,
furniture, jewellery, clothing, appliances and electronic items. It also covers
more unusual items - for example, if you are a musician, it will cover your
violin of oboe, and if you're an avid chess player, it can cover your collection
of chess sets. Be aware though, that more unusual items may have to be
individually specified in your policy to ensure that these are covered - and you
may have to pay extra on your premium for these. In all cases, it's best to ask
questions and confirm everything with your insurer - don't automatically assume
that your collection of rare Cuban cigars will automatically be covered to the
full replacement value as a normal part of your household contents insurance.
When you take out household insurance, be sure to know the difference between
insurance at market value and insurance at replacement value. Many people have
happily felt fully covered by their insurance policies, only to discover when
claiming that they have actually been under-insured. If you can afford to,
you'll want to avoid this situation at all costs.
The difference is this: with market value insurance, you're covered for the
value of your possessions if they were to be sold in the current market. So, for
example, if you bought your fridge for R2,000 a few years ago, if you were to
sell it, it might only fetch around R800 now. This is the amount you will be
paid if you've insured it at its market value. Which means that in order to
actually replace a stolen fridge, you'll either have to buy a second-hand one,
or fork out the difference between your insurance payout and the cost of a
brand-new fridge.
If you insure at replacement value, you'll be paid out what it would cost to
buy a new item at the current price when you claim. This is clearly the better
option, but it will raise your premium. Not necessarily hugely so, but you will
certainly pay more for you insurance. So the decision on which type of insurance
to take needs to be considered carefully - it's a case of balancing a higher
premium with the risk of having to spend more of your own money to replace items
that have been stolen, should this eventuality occur.
This is also why it's always a good idea to go to the extra trouble of
properly valuing your household possessions. Most people simply estimate the
total value of their household contents, rather than exhaustively valuing
everything. It can be an arduous task, but you'll be very grateful for it when
it comes time to replace lost items. Take the trouble to check how much
everything you insure will actually cost to replace, and make sure that this is
the value you insure it for.
Additional items covered
An interesting aspect of your household contents insurance is that it will
typically cover portable items that are in your possession when you (and they)
are not actually in your house. For example, jewellery that you have insured is
not only covered while it is in your jewellery box at home, but also while you
are wearing it outside of your house. You may well have to specify these items
as well (especially things like laptops). Other things that this type of cover
includes are bicycles that you ride around your neighbourhood, the contents of
your handbag and cell phones. However, don't assume anything when it comes to
insurance - if you are in any doubt as to whether or not an item may be covered,
make sure you ask the question before you sign on the dotted line.
A part of the home that people often neglect to take into account when
agreeing on an insured amount is the garden. Your plants and garden implements
are also covered - but you need to remember that if you don't add them into your
evaluation, they will be covered, but the lump sum that you are paid out will
have to be stretched so that you can afford to replace them. In other words,
while insurance companies will gladly cover these, you need to add the value on
to the rest of your household possessions value estimate in order to avoid being
under-insured.
As a general rule, you will need to specify high value items when you take
out household contents insurance. If you have an antique grandfather clock worth
R100,000 you'll need to individually mention this item and its value on your
insurance application form. This is so that you can be assured of being paid out
fair value for it. Insurance companies want to know each high value item that
you are insuring - and of course your premium will probably be higher as a
result.
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What are you covered for?
Household contents are subject to the same threats as your house - with the
exception that they're more prone to theft than your actual building is. Then
again, these days, who knows!
This means that your household content is covered against plenty of
eventualities, including:
- Fire or explosive damage or loss
- Storm damage or loss
- Theft and vandalism
You're also covered for additional things, which many people don't realise.
Typically the household contents insurance will also cover you against injuries
that you sustain at home, as well as liability that you may suffer should other
people get injured while visiting you. This would include accidents that
domestic servants suffer while working in your home. This protection is vital
when it comes to financial liability - someone who is injured in your house can
sue you for medical expenses - and this insurance will cover against this type
of expense.
Remember that we also review all the various insurance companies and their
packages in the review section of this site.
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