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HOUSEHOLD INSURANCE: CURRENT REPLACEMENT VALUE VS ORIGINAL PURCHASE VALUE

Just as the costs of goods are on the rise, the value of your household possessions increases over time. Unlike with vehicle insurance, household insurance covers you for replacing your lost, damaged and stolen possessions with new items. Therefore, it is crucial that they are insured for the current replacement value, so that they can be replaced for the value you would pay if you were to buy the same item today.

Household furniture and fixtures

Your lounge suite that cost R10 000 five years ago, is worth much more in today’s market and needs to be insured for more. If you have bought a new couch, you’ll need to adjust the contents of your home insurance accordingly as its replacement value will increase over time. Keep a copy of your receipt for the household items bought together with your inventory. 

Electronics

Electronic items decrease over time which means that the replacement value will be less than the original value. Any new valuable electronic item that you buy should be added to your household insurance policy. Since electronic devices like laptops and smartphones can be carried wherever you go, you’ll also need to check if they need to be specified under all risk cover. 

Renovations or additions to home

If you’ve enhanced the value of your home with renovations or replacements, you need to increase the amount that your house is insured for. Your home insurance policy should not be calculated on what the property is currently worth on the market, but rather on what it would cost to rebuild the property today, including all professional fees required to rebuild the property.

Jewellery 

The value of your jewellery bought years ago is worth much more today. Ensure that your valuable jewellery pieces are covered for their correct replacement value and be sure to specify them in your policy, if required. As many jewellery items are worn when you are outside of your home, they need to be specified under all risk insurance cover. Keep jewellery valuation certificates safe and update them regularly with a reputable jeweller.

Artworks and collectables

The accumulative value of valuable paintings, sculptures or collectables can become substantial over time and will be difficult to replace in the event of loss, damage or theft. These items require proof of ownership and valuations to be insured, so you would need to obtain a professional valuation so that they can be accurately accounted for in your contents cover and specified if required.

Gold coins 

Owners of Krugerrands are required to have a certificate of ownership and their value to be specified in their policy. In the event of a claim, the replacement value of Krugerrands will be determined by the gold price at the time of the claim.

Firearms 

Firearm owners need to specify their weapon/s along with ammunition, reloading equipment and scopes. Firearm accessories are often more expensive than the firearm itself and therefore the individual values thereof need to be taken into account. If you own a firearm, you’ll need to check policy requirements. Having a fully operational safe in your home and providing a copy of your firearm licence in the event of a claim are common prerequisites.

General

  • Consult your insurance advisor and ensure that your household goods have been evaluated according to their correct replacement value. 
  • Use an inventory list to confirm that your household items have been listed and insured correctly. Send an email to indwe@indwe.co.za or to your Indwe branch to receive an inventory list. 
  • Remember to consider overlooked inventory that may be stored in outside buildings like garages, flatlets, etc. 
  • Policyholders should try to keep receipts for certain items to fast-track claims. For example, the following items with a value of below R15 000 may be regarded as a fast-track claim (depending on insurer) and no assessors will be appointed:
    • Electronic equipment (cell phones, laptops, etc.)
    • All risk personal effects (handbags, make-up, etc.)
    • Keys
    • Bicycles
    • Collectables like stamps and coins
    • Groceries
    • Motor tools/parts/radio
    • Credit cards
  • Review your policy schedule annually and update your policy items and values according to their replacement value if necessary.
  • Do not rely on the inflationary increases applied to your policy alone to cover the additional costs.

If you need advice about whether your possessions are adequately covered according to replacement value, or if they need to be specified in your policy, speak to your Indwe advisor today.

Indwe is an authorised Financial Services Provider. FSP: 3425