R50 000 handbag an all-risks alert

Handbags have gained new status and are no longer a mere practical accessory.  With a price-tag of up to R50 000, these highly fashionable handbags have now become luxury items.  Losing such a designer bag together with its contents can mean a devastating loss to its owner.  The increased value of designer goods, such as these handbags, should encourage insurance policyholders to review the all-risk section of their policy and add these items. 

Mutual & Federal, a leader in short-term personal insurance, says it recently paid a R50 000 claim on a lady's handbag.

Settlement had been prompt despite the size of the claim on a single out-of-home item as the prudent claimant had met the all-risks requirements of the policy.

Merrick Oeschger, Executive General Manager, Personal Business, at Mutual & Federal, comments: "The R50 000 handbag is a company record, but we believe the overall short-term industry record now approaches R75 000.

"It is a reminder that some extremely expensive items are being carried out of the home these days and that policyholders should be reviewing the all-risks provisions of their policies.

"As a general rule, the moment you take an item out the confines of your home, it is not insured ... unless it is specified in the all-risks section of your cover. 'Household contents' means just that - the contents of the home that stay within the home."

Mutual & Federal sounded a consumer alert some time ago that a sustained 'wealth effect' was driving up the replacement values of both household contents and possessions carried on the person, including desirable handbag brands, expensive watches, jewellery, laptops, personal digital assistants and cellphones.

Says Oeschger: "South Africa is going through the most sustained period of economic growth in decades. As an insurer, we would expect to see consumers engaging in regular upward revision of the values covered by personal lines, but it is not happening to any significant extent.

"It is important that consumers are sensitive to these issues. The lady with the R50 000 handbag was, but I'm afraid many claimants could face disappointment unless they revise the items on the all-risks list and re-examine current replacement values."

One problem is that old habits often die hard even when new wealth changes the insurance parameters.

"The most obvious example is the gents wristwatch," says Oeschger. "A salary-earner may not have bothered to put his watch on the all-risks list because in his early career it only cost R500.

"Now, after a few promotions and a leap up the pay-scales, his watch costs R5000. But the old habit of forgetting about all-risks cover persists until the day the watch is lost or stolen. Don't leave issues like this until it is too late. Review your personal lines insurance policy BEFORE a loss occurs, not after."