Natural disasters: Make sure you’re protected

06 February 2020 King Price
Wynand Van Vuuren, Partner of Client Experience at King Price

Wynand Van Vuuren, Partner of Client Experience at King Price

Natural disaster? It’ll never happen to me. That’s a common perception among millions of South Africans – but with natural catastrophes on the rise across the world, you could be making a costly mistake if you don’t take steps to protect yourself and your property.

Hurricanes, fires and floods cost the world an estimated $150 billion in 2019. Closer to home, flash floods swept through parts of Pretoria in December, causing millions of Rands in damage. The month before that, tornadoes ravaged areas of KwaZulu-Natal, killing more than 20 people and causing substantial damage to property.

King Price’s partner of client experience, Wynand van Vuuren, says natural disasters in South Africa are becoming increasingly common, at a staggering cost to the economy and the insurance industry. The Knysna fires and Cape storms of 2017 are estimated to have cost the insurance industry between R3 billion and R4 billion, while the estimated cost of infrastructural damage from the KwaZulu-Natal floods earlier in 2019 is R1.1 billion.

“Damage caused by a natural disaster can be a devastating blow to your finances. Most South Africans focus on insuring themselves against robbery and break-ins, but don’t pay enough attention to protecting their homes and possessions against natural disasters. In South Africa, most natural disasters – including floods, hailstorms and fires - are covered by comprehensive insurance policies, but many people are either not insured or under-insured,” said Van Vuuren.

King Price says many homeowners only discover they are under-insured after their homes are damaged by fires or floods. On top of their home contents cover, homeowners should make sure their buildings insurance covers the full cost of rebuilding their homes if necessary. This includes unseen expenses like fire brigade costs, alternative accommodation, demolishing old structures and site clearing – all of which can run into hundreds of thousands of Rands.

One of the main reasons people give for not insuring their property is financial, says Van Vuuren: They feel insurance premiums are too expensive, and the current spate of natural disasters will only drive premiums up even further.

“I always say to clients: What will you do if you lose your house tomorrow? Can you afford NOT to insure your property?” says Van Vuuren. “If you need to cut back on your insurance, remember: The biggest portion of contents insurance goes for theft cover. If you stay in a secure complex with a low theft-rate, you could reduce your home contents premium by opting for King Price’s fire and fury cover, which excludes theft but still covers you against fire and acts of nature.”

Others doubt the ability of insurers to meet massive claims caused by natural catastrophes, which can run into hundreds of millions of Rands per event.

“When it comes to paying claims, there’s no need for concern. In South Africa, the industry regulator requires all insurers to maintain adequate surplus funds for potential claims because of insurers’ exposure to large catastrophe events, including hail and earthquake. If you lose your house, and you’ve dotted the Is and crossed the Ts on your insurance policy, you’ll be paid out,” says Van Vuuren.

In the long run, though, simply paying claims may not be enough as natural disasters continue to increase. At industry level, insurers are already talking about ways they can help people become more resilient to natural disasters. Their ability to offer the protection that modern society relies on, depends on it.

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