The pitfall of discounts: under-insured

Black Friday is here: thousands of discounts – especially online. This practice has become a worldwide phenomenon, and it’s hard to see a downside – until you insure your new purchases.

According to Louis Hay, head of short-term insurance propositions at Standard Insurance Limited, thousands of South Africans may find that the discounted costs of some of their online Black Friday or Cyber Monday purchases will soon increase markedly in the coming weeks – either back to their true worth before the sales, or because of the fluctuating value of the rand.

Therefore, if individuals do not accurately insure their items from the start, they could find that they are told they are underinsured and no longer qualify for “like-for-like” compensation when lodging a claim.

“Basically, policyholders could find themselves getting less than expected from a claim if they don’t insure their items at their true or actual value, regardless of the sale price at which it was purchased,” says Hay.

“To ensure you get the best value from your insurance premium and don’t find yourself in a situation where your claim is rejected on the basis that you were ‘under-insured’ when the loss occurred, all items should be correctly valued,” advises Hay.

“This means, essentially, that your premium should be calculated to reflect the value of your item at the value it would take to replace it. People who are uncertain about the value of their possessions should ask their insurance company for assistance. A professional assessor will be sent to help itemise and correctly insure possessions.”

Other things that people should bear in mind are: Check the details of policies to avoid being disappointed and “out of pocket” when claims are made.

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