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Knowledge Hub

4 Home Contents Insurance Mistakes to Avoid for New Policy Holders

5 min read

4 Home Contents Insurance Mistakes to Avoid for New Policy Holders

Home and Leisure August 23, 2024

Imagine the following scenario: you're dealing with a damaging incident in your home and must make a Home Contents Insurance claim. You dutifully fill in and submit the forms, but your claim gets rejected. Facing thousands of rands in replacement costs, you break out in a sweat. Where did things go wrong?

Thankfully, this situation is entirely avoidable. Dialdirect knows all about Household Contents Insurance in South Africa and has identified the top mistakes people often make with this type of coverage. Here's what you need to know — and avoid.

Why it’s essential to take out Home Contents Insurance

The first step to avoiding common insurance mistakes is understanding what makes Home Contents Insurance essential and how its coverage sets it apart.
Essentially, it's insurance for all valuable belongings in your home that don't form part of the fixed structure of your house.

It covers all the possessions you'd take with you if you moved out. Some policies include cover for, or allow you to add Portable Possessions Insurance, for the valuables you tend to keep in your handbag or with you when you're out and about.
The most straightforward benefit of Home Contents Insurance is being able to replace costly appliances and electronics if they get stolen. While this is a definite benefit, there are so many other scenarios it could come in handy for — and household items you could benefit from insuring that you may not have considered before.

For example, this past winter's Cape storms damaged over 35,000 homes — with many experiencing their roofs torn off their homes. While Homeowner's Insurance covers the cost of repairing these homes to a liveable condition, it doesn’t cover items damaged or destroyed by the storm — which is where Home Contents Insurance comes in.

The top 4 mistakes to avoid when taking out Home Contents Insurance

Now that you know the value of Home Contents Insurance and how it differs from other insurance forms, here are the biggest mistakes to avoid when selecting an insurance product and insurance coverage level.

1. Not formally evaluating your belongings
The value of household contents can depreciate fast and fluctuate frequently. This makes having an up-to-date valuation of each item critical to prevent underinsurance — and possibly save you money. For example, your television could have a lower market value now than when you bought it, making it cheaper to insure than you assumed.

2. Not regularly updating your policy
Your insurance should be as dynamic as your lifestyle, meaning you should regularly curate and update its coverage as your needs evolve. Follow specific processes, like reworking your inventory and saving receipts and proof of ownership documents, whenever your home contents change. This will make it easier to quickly place a Home Contents Insurance claim should you need to. Try to set aside time yearly to explore your coverage limits, make sure new purchases are on your inventory, and check that all items’ recorded values align with their market replacement values.

3. Making assumptions about your coverage
Insurance documents can be complicated and challenging to understand. Still, you should never accept a policy unless you know what you're signing up for. Some policies exclude certain types of damage or loss, such as wear and tear, natural disasters, or negligence. You could also run into problems by not having home security measures in place, like alarms or secured doors and windows. You could find that you've overlooked certain items or that others need higher limits or additional riders for adequate coverage. Also, be aware that you might need optional add-ons for extra protection against emergencies or accidents.

4. Picking the cheapest possible premium
It's common for first-time insurers to pick the cheapest coverage level for their home's contents. While this might save money in the short term, it could backfire when it's time to place a Home Contents Insurance claim. Unless you can easily afford the deductible or don't mind not getting exact replacements for your goods, you should consider forking out more for long-term peace of mind.

Tips to remember when taking out Home Contents Insurance

Ready to begin looking for Home Contents Insurance? Simplify the process with these tips:

Specify your home contents — Start by listing all the items needing insurance. Think about what you'd want to replace quickly should it get stolen, damaged, or destroyed.
Keep receipts to prove items’ values — If you don't have receipts, find the items’ current market values or what it would cost to get replacements with similar qualities. Remember that when it comes to electronics or appliances, you can’t insure items for future models’ or editions’ values.
Keep an inventory — Create a digital inventory of insured items with details such as photos, their values (and date of valuation), and digital copies of their receipts.
Be honest — Listing an item for more than it's worth or lying about the circumstances of a claim can be considered fraud, which can result in the Home Contents Insurance claim being rejected or the entire policy cancelled.

Get a Household Contents Insurance quote

Stay alert for common pitfalls of Household Contents Insurance and only take out a policy that gives you full protection. If you haven't found what you're looking for, get a Dialdirect Household Contents Insurance quote on the best option for your needs.

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Sources:

[1 ] Engineering News:South Africa storms in Western Cape cause damage to 35 000 homes

Disclaimer: The information in this article is provided for informational purposes only and should not be construed as financial, legal, or medical advice.