Risk Management essential to avoid financial loss of fire damage

The two large fires currently being battled in the Western Cape, including the Franschhoek fire that has destroyed over 6,000 hectares of land and the fire on the Cederberg Mountain range which has burned over 25,000 hectares, highlights the destructive f

This is according to Christelle Fourie, Managing Director of MUA Insurance Acceptances, who says fire tends to have the most devastating impact on a property and can often result in a total loss of the building. “The fires in Franschhoek and the Cederberg have demonstrated the scale of damage that can be caused once a fire gets out of control and nothing but a sound insurance policy will assist to pay for the necessary repairs or replacement of the home.”

She advises consumers to have a proper valuation at the start of the relationship with their insurance provider, as this ensures a smoother claims process but more importantly, can also indicate whether a building is underinsured. “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, one needs to insure for what it would cost to rebuild the property not what it would cost to buy.”

“We had a case approximately three years ago when a client, Mr Kislingbury, suffered the consequences of underinsurance after his thatched roof home in Franschhoek was burned to the ground, says Fourie. “Two years before the fire occurred, a professional valuator was sent to the property to provide a thorough cost assessment of what it would cost to rebuild the home in the event of total loss. As Mr Kislingbury is a builder by trade he believed he could rebuild the property for less. He asked that the rebuild cost, which had been estimated at about R4m, be reduced to R3.3m. He also requested certain items be struck off the policy as they would not wish to replace them. This left his contents valued at R1.7m, from an original estimate of about R2m. In total, he lost R1m from his insurance claim that could have been paid out if the original valuation had been accepted.”

Fourie says one of the most frequent comments from clients is that they believe the value on their building is overstated. “They think they can get a builder for less per square metre than we estimate. As a result, they insure on this value but when the time comes to claim, this means they get paid out far less than is adequate to properly replace the house.”

If a homeowner does find themselves in a fire, the first thing to do is ensure their own personal safety, says Fourie. “We often hear of people who either try to put the fire out themselves or return to the building in attempt to save as many items as possible. The point of having insurance is to return you to the position you were in before the loss and as distressing as losing possessions in a fire may be, these things can all be replaced.”

“We have also seen many instances with clients who believe they are taking a proactive step by putting all important documents such as marriage certificates, ID, passports and deeds, in a safe in their house. However, if their home burns down, while the safe may be left intact, the heat will often destroy the documents inside.”

Fourie says if consumers go to the trouble of backing up photographs on to a memory stick or making copies of essential documents, then it is advisable to put them in a safety deposit box at the bank so that there are copies stored separately somewhere else.

“It is also sensible for homeowners to take precautions such as having a fire extinguisher in the kitchen – which is where many fires start. The installation of smoke detectors is also very important, as this may provide valuable minutes for occupants to be alerted and to get out safely.”

Fourie says consumers who may be more prone to fire damage, such as those living close to mountains or dry areas, 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. 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, thereby stopping firemen from effectively battling a fire.”

“By taking some adequate precautions now, homeowners can either lessen the financial impact of a fire, and more importantly, can ensure that they are able to get out of the property as early as possible,” concludes Fourie.