New Crime Stats Highlight Need For Household Insurance

News that household robberies in South Africa increased by more than a quarter over the last year has highlighted the necessity of having household insurance cover.

Official statistics released by the Police for the 2008/09 financial year revealed a 27.3% increase in household robberies. According to JonJon Smit of CIB Insurance Solutions (CIB), this rapid increase is particularly worrying given the fact that many South Africans under insure the contents of their homes.

“Too many people are under the impression that their homes are adequately covered, when this is actually not the case.”

A survey released last year by Quantum Risk Assessments found that 77.7% of South Africans with household contents insurance were under-insured by an average of 61%, potentially leaving millions of South Africans massively out of pocket should they fall victim to household theft.

“It is important that people don’t underestimate the value of their contents, or the cost of replacing them. In the event that you are a victim of theft, you can be left seriously out of pocket.

Smit advises that people should regularly assess their household contents cover to ensure that any new items are included.

“Very often consumers keep the same policy in place without checking to see if the coverage is still adequate. Given the rise in household robberies, it is increasingly important that people check their policy to make sure they are not under-insured,” says Smit.

What many South Africans do not know is that insurers apply a "condition of average" to your household contents insurance. In other words, if your household contents are worth R200 000 and you are only insured for R100 000, your insurer will only pay out R50 000 should you claim for R100 000 worth of goods. This is because your premium only covers the risk of 50% of your household goods.

He says many South Africans may not even be aware that they are under-insured as people often fail to update the cost of their household contents. “Consumers may purchase a range of expensive new items such as TVs, couches or digital music players, without considering increasing their coverage to include such items.”

Under insurance can easily be avoided if consumers regularly review the contents of their home, says Smit. “It is important to understand the terms of your policy. If you are unsure about your coverage and what contents you are insured for you should raise your concerns with your broker.”

The latest crime statistics also revealed that there was little distinction between the households being robbed, with people from all walks of life having experienced household robberies, not just those living in wealthier areas.

“The idea that criminals are only targeting the wealthiest homeowners is a misnomer. It is clear from the police report that all types of households are targeted and therefore it is crucial that all South Africans ensure that they are adequately covered in the event of a possible theft,” says Smit.

He adds that it is also important to ensure that your home is as secure as possible, through installing burglar bars, alarm systems and security gates. “Not only will this ensure greater personal safety and reduce the chances of a break-in, it will also generally result in cheaper premiums.”