Recent natural disasters highlight necessity of insurance coverage

Hannes Smith, Head Personal Lines Sales & Operations at Old Mutual Insure.

Natural disasters can have catastrophic consequences on a region’s fauna and flora as well as leaving countless victims having to start the painful process of rebuilding their lives from the tatters it has been reduced to.

The recent Cape storms, fires in Knysna and devastating floods in Johannesburg and Durban, have all had devastating effects on the local population, with nearly 10 000 residents evacuated and homes, schools, structures and power and communication lines destroyed. The expected total damage caused by the devastating fires in Knysna could reach in excess of R4 billion.

“The recent Knysna fire is certainly one of the largest natural disasters to hit South Africa in living memory. Compared with the last great fire in St. Francis Bay, there was at least five or six times more damage to properties in Knysna,” says Hannes Smith, – Head Personal Lines Sales & Operations at Old Mutual Insure.

This has highlighted the importance of having comprehensive insurance coverage. Unfortunately, Old Mutual Insure data indicates that 60% of South Africans that should have short-term insurance do not have this kind of coverage, whether it is on their vehicle or their household possessions.

“During times of economic uncertainty and rising costs, people usually cut their insurance coverage to save money. Yes, you will be able to save on monthly premiums, but if the worst happens and you suffer severe damage to your property or vehicle, you will have to self-fund the full costs of repairing or replacing it,” explains Smith.

From an insurance perspective, living in South Africa already poses high risks in certain areas due to accidents and crime. “People only have to access the news to see how often South Africans suffer loss. This begs the question - is it wise to not have insurance that covers all the cost should you suffer a loss?” asks Smith. “If you take out insurance, you are pooling your risk in a managed way. The premiums you pay should be lower than what the cost of repair is likely to be, effectively giving you peace of mind,” says Smith.

Insurance coverage should be part of a responsible financial plan. “Dipping into your savings in an emergency like the recent events can have a long standing impact on the financial wellness of you and your family. Seeking professional financial advice to build a robust, personalised plan will ensure that individual circumstances and the associated risks are taken into account so that there are no nasty surprises should the unexpected occur,” concludes Smith.