Thousands of homeowners in South Africa are returning to the daily grind of earning a living so that they can pay their monthly bills and one of the financial chores that must be tackled early in the New Year is a revision of the short-term insurance cover that applies to the property and its contents.

According to Richard Gray, chief executive of Harcourts, the reality is that short-term insurance cover has to be reassessed to ensure that individuals are neither under- nor over-insured. A person who is under-insured will receive a smaller payout from the insurance company in the event of a claim while anyone who is over-insured will be paying premiums that are inappropriate for the cover.

Gray recommends that each homeowner should prepare a detailed inventory of the goods that are insured and this should be done on a room-by-room basis. Some insurance companies do not require a detailed inventory but it is a good idea to do one anyway as this establishes clear guidelines on the value of the household contents.

He says that serial numbers for high-risk items such as electronic goods, computers, television sets, cellphones and so forth should be noted and a record kept of these numbers. He warns that many people do compile such a list but keep it on a computer and, when the computer is stolen, the numbers disappear with it.

Special items, such a custom-made jewellery, expensive diamond rings or watches should be insured separately and the current replacement value – preferably via a valuation certificate – should be kept as well.

Having compiled the detailed inventory, the homeowner should consult the insurance company and find out what premium adjustments are likely to apply. In many cases, an insurance company will simply add an inflation-related price increase to the premium.

However, the important consideration is that any new items, acquired during the year, should be added to the policy so that these are covered in the event of a theft or, worse still, a total loss as a result of a fire.

Gray points out that it is advisable for all homeowners to keep a copy of the complete inventory away from the home so that in the event of a total loss there is a record of the goods that were insured and their approximate value. 

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