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What it really means for your insurance payout if you are underinsured

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Perhaps you think you are covered because you have insurance in place, but is it to the right value? If you are underinsured and need to claim, you may be disappointed by how little money your insurer will pay out.

Riana Wiese, PSG’s Insure Adviser of the year, reminds us what it means for you, and your pocket, if your household content is underinsured.

“For example, if the total replacement value of your household content is R100,000 and you are only insured up to R80,000, it will mean that only 80% (being R80,000 divided by R100,000) of your claim will be settled. So practically this means that if you have a burglary and your loss is R50,000 (as assessed by the assessor of the insurer), then the insurer will only pay you 80% of the R50,000, (which works out to R40,000) and you will incur a loss of R10,000.”

Keep in mind that these are low figures as many households are worth considerably more than R100,000. Many items will have increased in value due to the economy, so being adequately insured for their fair replacement value is crucial.


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It is easy to fall into the trap of underinsuring, or to only do selective insurance, just to save on an insurance premium, but it could end up costing you more in the end.

Regularly check with your insurer to ensure that your household contents is adequately covered, and while you’re at it, check that your contents cover for All Risk is up to scratch. This will cover your phones, laptops and other electronic equipment – in fact anything you might take with you when you leave your home.

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