Consumers warned of insurance risks ahead of summer fire season

Christelle Fourie, Managing Director of MUA Insurance Acceptances.

According to reports recently released from multiple meteorological agencies*, 2014 could be regarded as the hottest year in recorded history – largely as a result of rising CO² emissions from human activity. Experts have warned that the rising temperatures will mean that South Africa will have to brace itself for a very dry and hot summer season.

Christelle Fourie, Managing Director of MUA Insurance Acceptances, says that the rising temperatures will also mean that there is a greater chance of fires breaking out across the country. “Without adequate insurance cover in place, consumers are also at risk of being left with hefty financial bills for the damage caused by fires, as well as additional charges for the use of emergency fire services in the event of an incident.”

Depending on the city and the nature of the fire, homeowners may be subjected to a fee for the usage of fire personnel and resources that have been used to put out a fire at a private residence. According to the Fire Brigade Services Act of 1987, the controlling authority may apply a fee for the attendance of the service, use of the service and equipment, as well as for any material consumed (such as water or foam).

She explains that the various cities in South Africa have different policies in place regarding the usage of emergency fire services. “It is important that homeowners are aware of what services are covered in their area and what they may be expected to pay for, especially if they do not have adequate insurance cover in place. In addition, it is equally important that they also have the emergency contact numbers on hand at all times and know where to contact them in the event of a fire.”

Fourie points out that consumers who may be more prone to fire damage, such as those living close to mountains or dry areas, or those in thatched roof buildings, should speak to their insurer about obtaining more comprehensive cover. “Some insurance policies offer cover to fight approaching fires, which includes a private helicopter bombing water on their property in the event of a serious fire approaching. This may not be suitable for everyone, but it can be particularly valuable for those living in a fire prone area, especially as fires have been known to destroy water pipes and depleting water supply/pressure, thereby stopping firemen from effectively battling a fire.”

In addition to having the right insurance cover in place, Fourie also urges homeowners to have a proper valuation of their property to ensure a smoother claims process and to prevent underinsurance of the building.

“Underinsurance is one of the biggest issues facing homeowners, many of whom make the mistake of thinking that their home should be insured for its market value. Instead, policyholders need to insure for what it would cost to rebuild the property not what it would cost to buy.”

She uses the example of a home that has been bought for R2 million and is insured for R2 million. “Should the property be burnt to the ground, the insurance company will calculate the cost to rebuild it to the same standard as it was before. If it is found that the property would cost R4 million to rebuild, however, it means the building has been underinsured by 50%. In this instance, the insurer will only pay out half of the claim and the consumer will have to make up the remaining R2 million require to rebuild the property.”

“Fire is one of the most devastating causes of loss or damage to a home, which can financially cripple homeowners if a comprehensive insurance policy is not in place. Therefore, it is important that policyholders speak to their broker to ensure that their risks of property and financial loss are mitigated,” concludes Fourie.

*National Oceanic and Atmospheric Administration, NASA, the South African Department of Environmental Affairs and the Intergovernmental Panel On Climate Change.